Pakistan's Industrial Sector Struggles Amid Soaring Energy Costs

Pakistan is on the brink of an economic catastrophe due to the gradual increase in power tariffs for industrial consumers. The country's manufacturing sectors, particularly textile and apparel, are facing a severe blow as energy costs continue to rise steadily. With power tariffs soaring to 17.5 cents/kWh, more than double the rates in competing economies like India and Bangladesh, Pakistani firms are struggling to remain competitive in the global market.

The recent hikes in gas prices, along with the government's plan to cut off gas supply to industrial consumers, are further exacerbating the situation. This move is expected to push many manufacturers to shut down their factories, leading to a significant decline in industrial output and exports. The textile and apparel sector, which accounts for over 50% of Pakistan's export earnings, is already witnessing a sharp decline in production and export volumes.

Moreover, the high energy costs have pushed up prices of domestically produced inputs, making it more cost-effective for exporters to import raw materials from abroad. This shift towards imported inputs is not only eroding the domestic value addition in exports but also worsening Pakistan's trade balance.

As the government moves forward with its plan to disconnect industrial consumers from the gas network, experts warn that this could accelerate the pace of deindustrialization in the country. Without a viable alternative energy source at competitive rates, many businesses may be forced to close down, leading to job losses and further economic instability.

The escalating energy costs in Pakistan's industrial sector pose a significant threat to the country's economy. Urgent measures are needed to rationalize power tariffs and ensure a smooth transition to alternative energy sources to prevent a full-blown economic crisis.