Karachi: The President of the S.I.T.E Association of Industry, Ahmed Azeem Alvi, has voiced significant concern over the detrimental impact of cross subsidies on industrial electricity tariffs. He argues that this policy is undermining the viability of industries and deterring investment and expansion.

According to S.I.T.E Association of Industry, Alvi stated that industrial electricity tariffs carry a cross subsidy ranging from Rs 4.5 to Rs 7 per unit, which constitutes an additional 20 percent cost on already uncompetitive electricity prices. This burden, he claims, is pushing many industrial units to their limits, as they struggle to maintain their cost structures.

Alvi highlighted that Pakistan's failure to foster large-scale industries is largely due to distorted energy pricing. He criticized policies that penalize consumption and expansion, suggesting they impede industrial growth and efficiency. Furthermore, he noted the sharp increase in the number of protected consumers, arguing that the government is unfairly using the industrial sector as a balancing tool instead of providing fiscal support.

Commenting on the Incremental Consumption Package, Alvi described it as flawed and inconsistent. He pointed out that industries with higher electricity consumption during the reference period from December 2023 to November 2024 are now ineligible, despite representing stable demand. Alvi criticized the package for its lack of regulatory and technical basis, stating that it fails to incentivize incremental demand and distorts consumption patterns.

Alvi also questioned the Power Ministry's claims of improved sector performance, suggesting that if true, a competitive industrial tariff of around 9 cents per unit should be achievable. He called for the government to remove the cross subsidy on industrial tariffs, withdraw the current incremental package, and design incentives based on transparent and rational principles.

In his conclusion, Alvi emphasized that penalizing consumption and rewarding inefficiency will not lead to industrial revival, export growth, or employment generation. He urged for structural distortions to be corrected to achieve real economic outcomes.