Key Takeaways
- Export-oriented industries strongly oppose a proposed 5 to 10 percent increase in electricity tariffs.
- The industries warn that higher energy costs could undermine Pakistan’s export competitiveness.
- Representatives argue that the proposed increase is coming at an inopportune time, with existing challenges in the market.
Export-oriented industries in Pakistan have strongly opposed proposed increases of 5 to 10 percent in electricity tariffs by power distribution companies (DISCOs), warning that higher energy costs could further undermine Pakistan’s export competitiveness.
During public hearings on tariff petitions of four DISCOs for the year 2027, industrial representatives raised objections to the proposed rebasing of electricity tariffs, an increase in the fixed-cost component, and the recovery of historical expenses and utilities’ income tax liabilities from consumers.
Aamir Sheikh, who represented the industry’s concerns, said exporters had been seeking a reduction in electricity tariffs to nine US cents per unit, whereas competing countries were offering substantially lower rates, in some cases around five cents per unit.
Sheikh warned that the proposed tariff rebasing could further widen Pakistan’s cost disadvantage, particularly as the rupee’s appreciation against the US dollar would increase the dollar-equivalent cost of any rise in rupee-denominated electricity tariffs.
According to the industry’s assessment, the proposed rebasing could increase tariffs by between 5 and 10 percent in rupee terms, placing additional pressure on manufacturers competing in international markets.
Another major concern raised by the industry is the proposed increase in the fixed-cost component of electricity tariffs from the existing eight percent to nearly 20 percent.
Industrial representatives argued that manufacturers were already operating under difficult conditions, with disruptions in raw material supplies and subdued sales forcing some factories to reduce operating shifts.
Sheikh said industrial consumers could not afford an increase in fixed charges this year, including the minimum demand indicator (MDI) rate, which currently stands at Rs1,250 per kilowatt, equivalent to 25 percent of sanctioned load, according to the industry’s account.
Exporters have urged the authorities to retain the existing fixed-charge arrangements, arguing that increasing the fixed-cost share would place an additional burden on manufacturers regardless of their actual electricity consumption.
The industry has also expressed serious reservations over what it described as exceptionally high prior-year adjustments included in DISCOs’ revenue requirements.
According to Sheikh, representatives of distribution companies indicated during the hearings that they had been asked to clean up their accounts and claim all verified and unverified historical expenses before the proposed privatisation of the utilities.
Exporters had been seeking a reduction in electricity tariffs to nine US cents per unit, whereas competing countries were offering substantially lower rates, in some cases around five cents per unit.
Aamir Sheikh, Industry representative
