Supply Chain Report – 10/08/2025
The All Pakistan Textile Mills Association (APTMA) has expressed serious concern over the continued increase in industrial energy tariffs, saying that rising electricity and gas costs are eroding Pakistan’s manufacturing competitiveness, constraining exports, and threatening economic recovery.
During a detailed press conference held at APTMA House in Lahore, Chairman Kamran Arshad, accompanied by North Chairman Asad Shafi and senior textile industry leaders including Anjum Zafar, Faisal Jawed, S.M. Nabeel, Mohammad Ali, Sufyan Akhtar, and Secretary General Raza Baqir, highlighted that despite earlier commitments from authorities to lower industrial power tariffs to less than 9 cents per kilowatt-hour (kWh) by April 2025, rates have instead increased.
According to APTMA data, industrial electricity costs rose from 10.4 cents/kWh in May 2025 to 11.7 cents/kWh in September 2025, with further increases expected in the coming months. These developments, the association said, have undermined previous assurances that were intended to promote industrial stability and competitiveness.
APTMA emphasized that Pakistan’s industrial power tariffs remain significantly higher than regional benchmarks of 5–9 cents/kWh prevailing in other textile-producing countries such as India, Bangladesh, China, and Vietnam. This cost disparity, it said, places Pakistani exporters at a disadvantage in global markets where energy efficiency and pricing directly influence competitiveness.
Challenges with Policy and Implementation
Chairman Kamran Arshad stated that recent measures by the Ministry of Energy—particularly the imposition of a levy on gas for captive power and the push toward grid-based electricity—have worsened challenges rather than resolving them. Many industries, particularly those that invested in efficient combined heat and power (CHP) systems, are struggling to adapt due to the high costs of infrastructure upgrades, limited grid capacity, and frequent power disruptions.
“Several units that operated on high-efficiency systems have been forced to either shut down or rely on unreliable grid electricity, facing voltage fluctuations and outages that affect productivity,” Arshad noted.
APTMA also said that policy inconsistencies have disrupted the natural gas sector. Reduced industrial demand, it added, has created a surplus of re-gasified liquefied natural gas (RLNG), which is being supplied to households at subsidized rates of about $8 per MMBtu, while industries pay approximately $16 per MMBtu. The association warned that this price imbalance has discouraged industrial use, leading to lower local gas production. State-owned companies such as OGDCL have reportedly projected losses exceeding $378 million.
In addition, APTMA noted that exploration activities have sharply declined, with only one out of 23 oil and gas exploration blocks receiving bids in the most recent licensing round. The association said this downturn, combined with a growing gas sector circular debt now exceeding Rs. 2.6 trillion, signals a mounting energy sector crisis requiring immediate attention.
Concerns About Tax Practices and Industrial Policy
Beyond energy pricing, APTMA leaders also raised concerns about what they described as aggressive tax enforcement practices targeting compliant exporters. They cited incidents involving unannounced audits, record seizures, and delayed refunds, which they said disrupt business operations and discourage formal-sector compliance.
Chairman Arshad urged the Federal Board of Revenue (FBR) to adopt a more facilitative approach focused on improving compliance through transparency and support rather than punitive action. He added that harassment of documented exporters discourages investment and damages Pakistan’s reputation as a reliable supplier in international markets.
The association stated that the industrial cost of electricity remains artificially inflated by a cross-subsidy of over Rs. 130 billion annually. Although the actual cost of service for industrial users is around 8–9 cents/kWh, industries are charged significantly more to maintain subsidies for other sectors. APTMA argued that such a structure is unsustainable and counterproductive, as it undermines the country’s broader economic and employment objectives.
Regional Competitiveness and Market Challenges
North Chairman Asad Shafi highlighted the implications of high energy costs on Pakistan’s overall economic performance, noting that industrial stagnation, declining exports, and a lack of new investments are reflected in recent macroeconomic trends. He said the widening gap between energy costs in Pakistan and those in regional economies continues to discourage new industrial ventures, especially in export-oriented manufacturing.
Shafi also pointed to the Competitive Trading Bilateral Contract Market (CTBCM) model, which allows industries to purchase power directly from producers. He said the wheeling charge of Rs. 12.55/kWh, combined with other premiums, has made such bilateral purchases financially unviable. Moreover, the 800MW cap on market access limits industrial participation, forcing companies to rely on hybrid power from the national grid at marginal costs.
“The current framework does not reflect ground realities or industrial needs. Without affordable and reliable access to energy, no manufacturing sector can compete globally,” Shafi said.
Data Transparency and Economic Reporting
APTMA also referred to a recently identified $11 billion discrepancy in Pakistan’s trade data over a two-year period, calling for greater transparency in economic reporting. The association emphasized that credible data is essential for effective policy planning, investor confidence, and international trade credibility.
Policy Recommendations and Economic Outlook
The association urged the government to restore regionally competitive energy tariffs and to ensure that industrial consumers have non-discriminatory access to gas at actual cost levels. APTMA said that maintaining high tariffs and complex subsidy structures could lead to further deindustrialization, job losses, and reduced fiscal revenues.
APTMA leadership added that establishing a predictable, cost-based, and regionally aligned energy pricing regime could unlock the full potential of Pakistan’s industrial base. Lowering electricity and gas costs, it said, would not only enhance export competitiveness but also help attract domestic and foreign investment in manufacturing.
According to APTMA estimates, the textile industry alone has the capacity to export $25 billion annually, provided that energy prices are stabilized and made competitive. The association concluded that supporting industry through equitable energy and fiscal policies should be considered an investment in national economic sustainability rather than a concession.
A balanced energy policy, APTMA said, would enable Pakistan to increase exports, create jobs, and ensure stable growth across the manufacturing sector — critical steps toward restoring economic resilience and investor confidence.
#NewsUpdate #PakistanEconomy #EnergyPolicy #ManufacturingNews #TradeCompetitiveness
