Former caretaker Federal Minister for Commerce, Industry, and Production, Gohar Ejaz, has issued a stark warning, stating that the escalating burden of cross-subsidies on industrial electricity consumers is akin to signing a "death warrant" for Pakistan's industrial sector. The Chairman of the Economic Policy and Business Development (EPBD) Think Tank cautioned that persistently high energy costs are crippling the country's competitiveness, driving consumers away from the national grid, and severely undermining export potential.
Sharp Decline in Industrial and Agricultural Power Consumption
Ejaz presented detailed data revealing a troubling trend in electricity consumption. He stated that industrial power usage has fallen by 7 percent over the past two years, comparing the fiscal years 2022-23 and 2024-25. This decline is particularly alarming given that approximately 1,000 megawatts of gas-based captive power plants were reconnected to the national grid last year, which should have increased demand.
"This clearly shows that high tariffs are discouraging industrial usage instead of encouraging growth," Ejaz asserted.
The situation is even more dire in the agricultural sector, where Ejaz highlighted a staggering 38 percent drop in electricity consumption. He attributed this mass exodus to a widespread shift towards off-grid solutions, primarily solar energy, as farmers and other users seek relief from unaffordable power bills.
Shrinking Consumer Base and Mounting Subsidy Burden
Ejaz pointed out that this migration to alternative energy is shrinking the revenue base for power distribution companies (DISCOs). He revealed that around 11 million domestic consumers have already switched to solar power, and the number of users consuming below 200 units monthly has doubled.
While this offers respite to households, it transfers a heavier financial burden onto the remaining paying consumers, especially industries. Industries are already bearing an estimated cross-subsidy load of Rs102 billion, a figure that continues to climb as more users leave the grid or fall into protected, subsidized categories.
"This growing cross-subsidy on top of already high tariffs could become a death warrant for industry," Ejaz cautioned. He emphasized the critical role of industry, calling it the "golden goose" of the economy. "If the golden goose is slaughtered, the people of Pakistan will suffer heavily," he added.
Call for Urgent Reforms and Regional Parity
Ejaz criticized the ineffectiveness of existing incentive packages, stating they have failed to provide meaningful relief. He noted that Pakistani industries pay about Rs35 per unit (12 US cents) for electricity, while regional competitors pay less than Rs25 per unit (9 cents).
"Industry cannot expand, increase consumption or remain competitive until regional tariffs are matched," he stressed.
He called for immediate and decisive action, urging the Power Division to:
- Remove cross-subsidies from industrial tariffs.
- Renegotiate expensive power purchase agreements (PPAs) with Independent Power Producers (IPPs), especially coal and wind plants.
- Conduct a thorough review of DISCO consumption data for evidence-based policy.
Ejaz concluded with a final warning that without rationalizing tariffs, reducing subsidies, and aligning power prices with regional benchmarks, Pakistan's industry will remain under severe stress, jeopardizing exports, employment, and long-term economic stability. "If we continue on this path and kill the golden goose, the cost will ultimately be borne by ordinary citizens," he said.
