Moaaz Manzoor

The Pakistan Textile Council (PTC) has called for an urgent redressal of electricity tariff structures, warning that high industrial power costs are severely undermining the competitiveness of Pakistan’s textile and apparel exports.

In a letter addressed to the Adviser to the Prime Minister, Dr. Syed Tauqir Hussain Shah, PTC Chairman Fawad Anwar highlighted a broad-based decline in textile and apparel exports during the first half of FY2025–26, affecting all major product categories as well as key export markets, including the European Union, the United States, and the United Kingdom.

According to the letter available with Wealth Pakistan, while global demand conditions have softened, elevated domestic input costs and policy distortions have emerged as the primary factors eroding Pakistan’s export competitiveness. The letter notes that Pakistan has failed to gain market share even in the United States, despite higher tariffs imposed on competing suppliers, underscoring the structural cost disadvantages faced by local exporters.

The letter points to electricity tariff structures as a critical constraint, particularly the burden of industrial cross-subsidisation embedded in power tariffs. PTC estimates that the cross-subsidy burden borne by industrial consumers ranges between Rs131 billion and Rs160 billion, including Karachi Electric, inflating production costs for export-oriented manufacturers and placing Pakistan at a disadvantage relative to regional peers.

The letter also raises concerns over the blanket application of the Time-of-Use (ToU) tariff regime to industries operating on a three-shift basis. According to PTC, peak-hour charges under the ToU framework impose punitive costs on industries that provide stable base-load demand to the grid. As a result, exporters have been compelled either to curtail production during peak hours or absorb unsustainable cost increases.

PTC further notes that the introduction of an incremental tariff regime has weakened the traditional rationale for maintaining a rigid ToU structure. The letter states that electricity consumption above reference levels is now charged at incremental rates regardless of timing, rendering the existing ToU framework increasingly inefficient from both economic and operational perspectives.

In view of these issues, the council has proposed removing cross-subsidies embedded in industrial electricity tariffs and adopting a simplified, weighted-average tariff for industrial consumers. According to the letter, such a move would immediately improve export competitiveness, enhance grid utilisation, and reduce incentives for grid defection.

The letter warns that the current export trajectory, combined with intensifying regional competition and upcoming trade developments, including India’s free trade agreements with the EU and the UK, constitutes an export emergency. PTC states that the situation warrants decisive and time-bound government intervention, comparable in urgency to the economic relief measures undertaken during the COVID period.

The letter concludes that Pakistan’s textile sector continues to possess the capacity, workforce, and market linkages required to drive export-led recovery. However, according to PTC, this potential can only be realised through the provision of a cost-competitive, predictable, and rational policy environment

Credit: INP-WealthPk