Cosmetic incentives, policy chaos threaten massive de-industrialisation

Lahore
Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) Chairman Mian Anjum Nisar has come down hard on the government’s proposed “incremental power consumption” package, saying the plan is inadequate, poorly designed, and unlikely to revive Pakistan’s struggling industrial sector. He said that the policy reflects a lack of understanding of ground realities and fails to address the structural issues that have made the country’s power tariffs among the highest in the region.
FPCCI former president’s remarks came after the Power Division presented its proposal before the National Electric Power Regulatory Authority (Nepra), seeking an urgent approval of a special discounted electricity rate of Rs22.98 per unit for incremental industrial consumption. The government claims that this package, which also covers private agricultural consumers, will encourage higher energy use, stimulate industrial growth, and stabilise the national grid without any fiscal burden on the exchequer.
However, he rejected these arguments outright. He said that when industries are already paying Rs34 to Rs38 per unit — among the highest in Asia — offering a discounted rate only on additional usage would have no meaningful effect. “This is not relief; it’s an illusion,” he remarked. “If the government truly wants to revive manufacturing and exports, it must bring down the base tariff for industrial consumers to single-digit cents, not design complex schemes that offer symbolic discounts.”
Anjum Nisar pointed out that Pakistan’s industrial sector has been under severe stress for years, with rising energy prices, excessive taxation, and unpredictable policies pushing many units to shut down or relocate abroad. “Our regional competitors — Bangladesh, Vietnam, and India — offer electricity between 4 and 9 cents per unit. How can Pakistani exporters survive in global markets when we are forced to pay nearly four times that cost?” he questioned.
He emphasised that high power tariffs are not just an industrial issue but a national economic concern. “Expensive energy directly translates into inflation, unemployment, and reduced export competitiveness,” he said. “Without affordable and reliable power, no incentive, subsidy, or special package can save the manufacturing sector.”
The FPCCI’s BMP Chief further criticised the Power Division’s attempt to fast-track the package’s approval without proper consultation.
He also expressed concern over the government’s tendency to announce schemes without coordination between federal and provincial authorities. “Even now, there are conflicting solar and renewable energy policies in Punjab and at the federal level. This lack of alignment discourages investment and confuses industrial consumers,” he said.
Highlighting the decline in industrial and agricultural electricity consumption, Nisar said the data reflects a deeper crisis. According to the Power Division’s own figures, industrial demand has contracted by 14 per cent while agricultural demand has dropped by 47 per cent due to macroeconomic pressures and the growing shift towards solar and captive generation. “These are alarming numbers,” he said. “They show that industries are moving off-grid not by choice but by necessity. They simply cannot afford grid electricity anymore.”
He added that such behaviour undermines the sustainability of the national grid. “When paying consumers leave the grid, the entire cost burden shifts to the remaining users, further increasing tariffs. This vicious cycle will continue unless reforms make the system competitive again,” he explained.
Anjum Nisar urged the government to eliminate cross-subsidies that unfairly penalise industries. “Industrial consumers are forced to pay for inefficiencies and subsidies for other sectors. This is not sustainable. Cross-subsidisation has distorted the entire tariff regime,” he said.
The FPCCI ex-president also criticised the lack of accountability in the power sector. “We keep hearing about circular debt, transmission losses, and capacity payments, yet no one is held responsible. The focus should be on reducing system inefficiencies rather than imposing new burdens on productive sectors,” he added.
He supported Nepra’s observation that rushing through regulatory approvals undermines due process. “We must restore the credibility of our regulatory framework. Decisions affecting billions of rupees and thousands of jobs cannot be taken overnight just to show quick progress,” he said.
Anjum Nisar proposed the creation of a joint task force comprising representatives from the Power Division, Nepra, FPCCI, and key industrial associations to develop a long-term industrial energy strategy. This body, he said, should focus on simplifying tariff structures, ensuring fair competition, and gradually transitioning toward renewable sources without compromising affordability.
“The government’s job is not to sell expensive power but to create an environment where industries can operate efficiently and profitably,” he said. “If we continue with high tariffs, erratic policies, and cosmetic incentives, we will face massive de-industrialisation.”
He also pointed out that previous schemes — including the Industrial Support Package (2020–23) and the Bijli Sahulat Package (December 2024–February 2025) — had only provided temporary relief and failed to create lasting stability. “Short-lived schemes cannot solve long-term structural issues. What we need is predictability and competitive pricing,” he added.
Anjum Nisar urged policymakers to listen to the business community rather than bureaucratic voices disconnected from market realities. “We want to cooperate with the government in finding solutions, but solutions must be based on economics, not optics. The survival of Pakistan’s manufacturing base depends on immediate, bold, and rational energy reforms,” he concluded.