ISLAMABAD: The All Pakistan Textile Mills Association (Aptma) has raised serious concerns over the current electricity pricing structure, warning that Pakistan’s industrial base is being pushed toward irreparable decline due to unaffordable energy costs and an unsustainable cross-subsidy mechanism embedded in the national power tariff framework. Addressing a press conference, Aptma Chairman Kamran Arshad stated that textile exports, a key pillar of Pakistan’s economy, have been declining year-on-year for the past five consecutive months, with a sharp 8% drop recorded in December 2025 alone, underscoring the immediate economic impact of these distortions. “The country’s industry cannot be run on existing electricity tariff,” Chairman Aptma said. READ MORE: Industrial, export-oriented consumers: Imposition of Rs130bn cross-subsidy opposed According to him, Aptma noted that electricity tariffs for large-scale industrial consumers in Pakistan remain significantly higher than those in regional competitor economies, where rates for industrial usage typically range from 5 to 9 US cents per kWh. In contrast, the effective tariff for Pakistani industries is around 13 cents per kWh. This disparity is a core reason for the erosion of Pakistan’s export competitiveness, as the cross subsidy is a hidden tax that cannot be exported. At the centre of the issue is the policy of cross-subsidization, whereby industrial consumers are compelled to bear the cost of subsidies provided to other consumer categories. Regulatory filings and official disclosures show that the power sector will require a subsidy of Rs. 629 billion in 2026, while the federal allocation stands at just Rs. 248 billion. The Rs. Rs 381 billion shortfall is being recovered through cross subsidization from industrial and other consumers. For 2026, Nepra has determined tariffs of Peak Rs. 35/kWh and Off-Peak Rs. 20.63/kWh for B-3 industrial consumers. However, the Federal Government has set the power tariffs at Peak Rs. 36.68/kWh and Off-Peak Rs. 28.24/kWh. The difference between the Authority-determined cost-reflective tariffs and the tariffs set by the Federal Government represents a significant cross-subsidy burden on large-scale industry, and especially the export sector. This amounts to Rs. 7.61/kWh in the offpeak tariff and Rs. 1.68/kWh in the peak-tariff. Aptma has strongly opposed this practice, which is a hidden tax on industry and exports. The Association emphasized that social subsidies for lifeline and protected consumers must be transparently funded by the state through the federal budget. Shifting this financial obligation to the industrial sector undermines manufacturing, exports, employment, and investment at a time when Pakistan’s economy cannot afford further setbacks. Moreover, the current Time-of-Use (ToU) tariff regime is outdated and misaligned with actual demand patterns. Peak pricing hours no longer correspond with true peak system load, making the framework both economically inefficient and operationally irrational. The elevated peak-hour rates disrupt industrial load planning, raise operational costs, and discourage grid consumption at times when capacity is underutilized. Additionally, it incentivizes a shift toward solar and battery storage systems, further undermining demand for grid-supplied power. Aptma strongly recommends eliminating the peak hours’ tariff for industrial consumers in favor of a single, flat rate. The industry is already operating under high-cost conditions, with high interest rates, high tax rates, and global economic volatility. The added burden of inflated power tariffs has made many manufacturing operations financially unviable, leading to a slowdown in production, scaling back of operations, and in some cases, complete shutdowns. These outcomes are not just sectoral, they have wide-ranging implications for employment, exports, and macroeconomic stability. To address these issues, Aptma has called for the immediate removal of cross subsidy elements from industrial electricity tariffs. The Association has advocated aligning tariffs for industrial consumers with regionally competitive levels of not more than 9 cents per kWh. Doing so will restore export competitiveness, attract investment, improve capacity utilization, and create jobs. Furthermore, a cost-of-service based tariff regime would enhance electricity demand, improve generation utilization, and further reduce per-unit costs, leading to system-wide efficiency gains. Aptma reiterated that the burden of funding social obligations must rest with the government, not with industry. Only by restoring economic rationality in power pricing can Pakistan revive its industrial engine and chart a path toward sustainable growth. Copyright Business Recorder, 2026