APTMA urges Govt. to fix power sector inefficiencies, keep costs off industry

ISLAMABAD The All Pakistan Textile Mills Association (APTMA) has warned that improvements required in the power sector are not taking place within the required timeframe, leaving Pakistan’s economy vulnerable.
In a letter to Power Minister Sardar Awais Ahmad Khan Leghari, APTMA Chairman Kamran Arshad appreciated the minister’s recent efforts to reduce electricity costs, particularly for industrial consumers, which he described as the engine of any economy.
He said the recent elimination of cross-subsidies from industrial power tariffs is a significant step in the right direction and reflects the government’s commitment to improving industrial competitiveness.
However, despite these efforts, electricity costs for industrial consumers have yet to move toward the regionally competitive range of 7–8 cents per kWh. According to APTMA, the government’s positive measures, including the removal of cross-subsidies, continue to be overshadowed by deep structural inefficiencies and distorted incentives across the electricity value chain.
As a result, electricity prices for industrial consumers remain around 12 cents per kWh in Pakistan, while competing economies receive electricity at significantly lower rates — in some cases as low as 4 cents per kWh, such as in China.
Arshad noted that although the government reduced electricity tariffs for industry by Rs4.04 per kWh through the elimination of cross-subsidies, nearly half of this relief has already been eroded by a Rs1.78 per kWh fuel cost adjustment and a Rs0.35 per kWh quarterly tariff adjustment. This, he said, demonstrates that while tariff rationalization provides relief, underlying structural issues continue to push costs upward.
He stressed that the core challenge is not that electricity is inherently expensive in Pakistan; rather, structural inefficiencies and distorted incentives make it costly for consumers. Until these issues are addressed, high electricity costs will persist.
One major reason behind the high fuel cost component is the south-to-north transmission constraint, which prevents lower-cost generation located in the south — particularly coal and wind power — from being transmitted efficiently to demand centres in the north. As a result, the system relies more heavily on expensive RLNG, RFO or diesel-based generation, significantly increasing the fuel cost component of electricity tariffs.
Referring to NEPRA’s observations, Arshad cited the case of the 500kV Lahore North Grid Station. The project and its associated infrastructure were originally scheduled for completion by September 2021, but due to persistent delays it was commissioned only in December 2025.
Even after its completion, the Matiari–Lahore HVDC line remains heavily underutilised because the required transmission capacity between locations such as Port Qasim and Matiari, or Thar and Matiari, either does not exist or remains severely constrained.
This means that despite having adequate generation capacity — and despite consumers paying billions of rupees in capacity payments — the lowest-cost generation sources remain underutilised.
For instance, in FY2025 the Thar Coal Block-1, Thar Energy and ThalNova plants, which have among the lowest fuel costs in the system, operated at capacity factors of only 60 to 70 percent, whereas under optimal conditions these should be close to 90 percent.
Similarly, despite significant wind generation capacity being available, wind plants are not receiving adequate dispatch and their utilisation rates remain between 20 and 30 percent, mainly due to transmission constraints.
APTMA pointed out that consumers are already paying for this generation and transmission infrastructure through electricity tariffs as well as through the circular debt surcharge. Yet they are again being forced to bear the cost of its underutilisation through higher fuel costs and tariffs.
This, Arshad said, has created a serious and chronic lack of accountability in the power sector, as those responsible for delays or inefficiencies know that the resulting costs will ultimately be passed on to consumers.
“We believe this issue requires urgent rectification,” he said, adding that the opportunity cost of transmission delays — including higher fuel costs and related tariff impacts — should be borne by those responsible, whether it is the National Grid Company or other entities causing the constraint,” he said.
“These costs should not continue to be pushed onto consumers, particularly the already beleaguered industrial sector,” he added.
APTMA maintained that under the current set of distorted incentives, the improvements required in the power sector are not taking place within the necessary timeframe, leaving Pakistan’s economy vulnerable.
It emphasised that affordable and internationally competitive electricity is the single most important factor for stimulating industrial growth and expanding exports.
The association urged the power minister to ensure that none of the costs related to these transmission constraints are passed on to industry.