ISLAMABAD: The Auditor General of Pakistan (AGP) has observed that significant tariff escalation has adversely affected industrial competitiveness and agricultural productivity, leading to reduced consumption by productive sectors and under-utilisation of installed capacity. In its latest report titled “Reverse Impact of Post-2015 Generation Expansion on Industry and Commercial Sector,” Audit (Power) stated that, as envisaged in the Strategic Plan for the Privatisation of Pakistan’s Power Sector (1992), one of the core objectives of power sector reforms was to enhance capital formation while improving efficiency through competition, rationalising prices, and ensuring that electricity supply supports economic growth without imposing unsustainable financial burdens. The Strategic Plan emphasised that pricing policies should reflect the true cost of service, investment decisions should be economically efficient, and the sector should avoid structural imbalances that undermine long-term sustainability. Similarly, the Power Generation Policy 2015 aimed to eliminate load shedding, ensure energy security, promote private investment, and reduce the cost of electricity to enhance industrial competitiveness and economic development. During the impact audit of the unbundling of WAPDA, it was observed that after 2015, substantial generation capacity additions were undertaken, primarily through coal-based and RLNG-fired Independent Power Producers (IPPs). However, these additions did not correspond with growth in electricity demand from productive sectors. Installed generation capacity increased from 22,717 MW in FY2015-16 to a peak of 41,213 MW in FY2022-23, representing an increase of approximately 81 percent, before declining marginally to 38,431 MW in FY2024-25 due to state intervention, which resulted in savings of Rs 352 billion. In contrast, electricity tariffs witnessed an extraordinary escalation over the period. Between FY2015-16 and FY2023-24, commercial tariffs increased by approximately 242 percent, industrial tariffs by 289 percent, and agricultural tariffs by 216 percent. Although a partial downward adjustment in tariffs was observed in FY2024-25—with commercial tariffs declining from Rs 69.03/kWh to Rs 47.10/kWh and industrial tariffs from Rs 53.44/kWh to Rs 44.46/kWh — the tariff levels remained significantly higher than pre-expansion levels and continued to exert pressure on electricity demand. READ ALSO: Nepra pricing: AGP flags higher tariffs due to Discos’ inefficiencies Despite the expanded generation capacity, electricity sales to productive sectors continued to show a declining or stagnant trend. Industrial sales decreased from 28,115 GWh in FY2021-22 to 22,512 GWh in FY2023-24, before recovering marginally to 23,963 GWh in FY2024-25, which still remained well below FY2021-22 levels. Agricultural sales showed a persistent downward trend, declining from 10,922 GWh in FY2021-22 to 8,559 GWh in FY2023-24, and further to 5,840 GWh in FY2024-25, indicating continued contraction in electricity usage by the agriculture sector. Commercial sales, although increasing modestly from 7,253 GWh in FY2023-24 to 7,610 GWh in FY2024-25, remained largely stagnant relative to the scale of tariff escalation and installed capacity growth. Data for FY2024-25 reinforced the audit observation that capacity expansion was not translated into proportionate growth in electricity consumption, particularly in high-revenue industrial and agricultural categories. The marginal improvement in industrial sales during FY2024-25 appears insufficient to offset the cumulative decline observed since FY2021-22, while the sharp reduction in agricultural consumption suggests that tariff affordability constraints continue to outweigh supply availability. Many agricultural consumers have shifted to solar solutions following a subsidy of Rs 500 million from the federal government. This outcome indicates that post-2015 generation planning did not adequately incorporate demand elasticity, affordability considerations, and sectoral consumption behavior, contrary to the principles emphasised in the Strategic Plan regarding economically efficient investments and cost-reflective yet affordable pricing. As a result, significant tariff escalation has adversely affected industrial competitiveness and agricultural productivity, leading to reduced consumption by productive sectors and under-utilisation of installed capacity. The audit recommended reviewing post-2015 capacity expansion in line with demand projections, affordability, and efficiency principles outlined in the Strategic Plan. It further suggested rebalancing the generation mix towards indigenous and lower-cost resources to reduce exposure to imported fuel risks. Copyright Business Recorder, 2026