Pakistani industry strangled by electricity costs
Manufacturing companies in Pakistan pay nearly twice as much for electricity as their competitors in China, India, and the United States. This reality hampers their export competitiveness and worries industrialists.
Higher rates than the european union
According to the latest report from the International Energy Agency (IEA), “Electricity 2025 — Analysis & Forecast to 2027,” the average industrial electricity price in Pakistan reached 13.5 cents per kilowatt-hour (kWh) in 2024. This figure even exceeds the European average (11.5 cents), which is already under pressure.
- China: 7.7 cents/kWh
- India: 6.3 cents/kWh
- United States: 6.3 cents/kWh
- European Union: 11.5 cents/kWh
“With such a gap, our products become too expensive on the global market,” warns Arif Khan, a textile industrialist based in Lahore. “We are losing clients to Indian or Vietnamese factories, where production costs are much lower.”
An industry under pressure
Faced with these prohibitive rates, Pakistani manufacturers are cutting production, laying off staff, or turning to costly energy alternatives such as fuel-powered generators.
According to the IEA, this situation could lead to a gradual deindustrialization, a phenomenon already observed in Europe, where some factories have closed or relocated due to rising energy costs.
A sharp rise in global demand
Globally, electricity consumption increased by 4.3% in 2024, driven by industrial growth, the rise of data centers, and air conditioning use.
- China: +7% in 2024, with an expected annual growth rate of 6% until 2027.
- India: +6.3% per year, compared to an average of 5% between 2015 and 2024.
Cutting costs, a necessity
To prevent industrial collapse, Pakistan must act swiftly. Several solutions are being considered:
- Investing in renewable energy (solar, wind) to reduce reliance on fossil fuels.
- Negotiating more favorable power purchase agreements with energy suppliers.
- Modernizing electrical infrastructure to minimize losses and improve network efficiency.
Experts warn that without reform, Pakistan’s manufacturing sector risks prolonged decline, while other countries benefit from far more competitive energy costs. The ball is now in the policymakers’ court.
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