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Energy prices are sinking Pakistan’s industry as rising cross-subsidies, declining consumption and uncompetitive tariffs threaten exports and economic growth, former caretaker federal minister Gohar Ejaz has warned.
Islamabad: Chairman Pakistan Economic Policy and Business Development (EPBD) Think Tank and former caretaker Federal Minister for Commerce, Industry and Production Gohar Ejaz has termed the growing cross-subsidy burden on industrial consumers a “death warrant” for Pakistan’s industry, cautioning that persistently high energy prices are eroding competitiveness, forcing consumers off the grid and undermining exports.
In a details shared by Gohar Ejaz, he said the Power Division must urgently review electricity consumption patterns of distribution companies (DISCOs), as official data shows a sharp decline in demand from productive sectors despite policy interventions.
According to him, industrial electricity consumption has fallen by 7 percent over the past two years, comparing FY2024-25 with FY2022-23, even though around 1,000 megawatts of gas-based captive power plants were reconnected to the national grid last year. “This clearly shows that high tariffs are discouraging industrial usage instead of encouraging growth,” he said.
He highlighted an even steeper decline in the agricultural sector, where electricity consumption has dropped by 38 percent. Gohar Ejaz attributed this to a mass shift towards off-grid solutions, particularly solar energy, as farmers and other consumers struggle to cope with rising power costs.
“Around 11 million domestic consumers have shifted to solar,” he said, adding that the number of electricity users consuming below 200 units per month has doubled. While this trend provides relief to households, it is significantly shrinking the paying consumer base for DISCOs, he warned.
As a result, the burden of cross-subsidies is increasingly being transferred to industrial consumers. Gohar Ejaz noted that industries are already carrying an estimated cross-subsidy load of PKR 102 billion, which continues to rise as more consumers exit the grid or fall into protected categories.
“This growing cross-subsidy on top of already high tariffs could become a death warrant for industry,” he cautioned, stressing that Pakistan cannot afford to weaken its industrial base. “Industry is the golden goose. If the golden goose is slaughtered, the people of Pakistan will suffer heavily.”
He pointed out that electricity tariffs for industrial consumers in Pakistan are around PKR 35 per unit, or nearly 12 US cents, whereas regional competitors are paying less than PKR 25 per unit, or about 9 cents. “Industry cannot expand, increase consumption or remain competitive until regional tariffs are matched,” he said.
Gohar Ejaz also criticized the effectiveness of existing incentive schemes, stating that incremental packages have failed to provide meaningful relief to industry. He warned that many industrial units are already struggling to fulfill export orders due to high input costs, particularly energy.
Calling for urgent reforms, he urged the Power Division to remove cross-subsidies from industrial tariffs and ensure that industrial consumers are not forced to subsidize other categories. He also called for renegotiation of expensive power purchase agreements with independent power producers (IPPs), especially coal and wind power plants, to bring down overall electricity costs.
“The Power Division must ensure that both industrial and domestic consumers get affordable electricity,” he said, adding that a careful review of DISCO consumption charts is critical for evidence-based policymaking.
Ejaz warned that without decisive action to rationalize tariffs, reduce cross-subsidies and align power prices with regional benchmarks, Pakistan’s industry would 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 concluded.
