The Pakistan Textile Council (PTC) has urged the government to introduce a single gas tariff based on the Weighted Average Cost of Gas (WACOG), eliminate cross-subsidies, and reclassify combined heat and power (CHP) plants.
According to sources, the Council outlined these demands in a letter sent to the Prime Minister’s Adviser, Dr. Tauqir Hussain Shah, highlighting that export industries are facing severe challenges due to growing inefficiencies and policy inconsistencies in the energy sector.
The Council noted that the unregulated expansion of power plants and solar generation has undermined grid stability, while the current mechanism for selling excess capacity is ineffective and requires immediate reform.
In the gas sector, exporters are being burdened with multiple irregularities. For instance, the newly imposed levy on captive power has been incorrectly applied based solely on peak tariffs. Similarly, the Captive Operation & Maintenance (O&M) charge has been unjustifiably raised from Rs. 1.65 per unit to Rs. 4.31 per unit. The application of a debt-servicing surcharge is also deemed unfair as it is not part of NEPRA-approved tariffs.
The cost of captive gas-based power has already reached Rs. 3,500 per MMBTU, making it more expensive than grid electricity even before the levy. Meanwhile, electricity tariffs have climbed to an average of Rs. 33.50 per unit. High peak-hour rates have severely disrupted multi-shift production cycles, resulting in idle labor, reduced output, and inefficient cost utilization.
Despite surplus generation capacity, the continuation of peak tariffs is contradictory and economically damaging.
Furthermore, the Rs. 84,000 per ton furnace oil levy is forcing exporters to sell furnace oil abroad at rates lower than the domestic market, causing losses to both industry and the national exchequer.
According to PTC, the following measures are essential for achieving the “Flight Pakistan” target of $60 billion in exports by FY 2028-29:
- Introduce a single gas tariff based on WACOG and provide subsidies directly to consumers.
- Eliminate cross-subsidies for all sectors.
- Abolish peak tariffs, as Pakistan currently has surplus power generation that is not tied to supply constraints.
- Calculate captive power levy on average tariffs rather than using peak rates.
- Reclassify CHP plants under industrial processes instead of captive power to improve efficiency.
- Remove the Rs. 84,000 per ton furnace oil levy.
