energy

In recent years, the cost of doing business in Pakistan has risen dramatically, and at the heart of this problem lies the surging prices of energy—particularly petroleum, oil, gas, and electricity. For a country striving to boost its industrial sector and revive its economy, energy affordability should be a priority. Unfortunately, it’s proving to be the biggest obstacle. Industries are the backbone of any economy. They generate employment, drive exports, and contribute to GDP growth. But in Pakistan, industries are struggling to survive, let alone expand. The reason? Energy prices are simply too high to sustain efficient operations. Electricity tariffs in Pakistan are among the highest in the region. Industrial units are forced to pay inflated bills, which significantly raises their cost of production. The problem doesn’t end there. Gas shortages and high petroleum prices add further uncertainty and volatility. Many businesses, particularly small and medium enterprises (SMEs), have been forced to reduce their operations or shut down entirely due to unaffordable energy inputs. The challenge is not just financial; it’s structural. Pakistan heavily relies on imported fuels to meet its energy needs. When international oil prices rise, the cost is passed directly onto consumers, including industries. On top of that, inefficiencies in the power sector—like transmission losses, circular debt, and reliance on expensive energy generation—mean that even local production of electricity comes at a steep price. Now, the situation is about to get even worse. Under the latest agreement with the International Monetary Fund (IMF), Pakistan has committed to further increase the prices of petroleum, oil, gas, and electricity. This move is aimed at meeting fiscal targets and reducing subsidies. While it may make sense from a budgetary perspective, its impact on the industrial sector could be devastating. Higher energy prices will not only make it harder for industries to remain competitive but also discourage new investment. Investors are already wary of Pakistan’s unstable business environment, and this will only reinforce their hesitation. As industries shrink or relocate to more cost-effective regions, unemployment will rise, and economic stagnation will deepen. This is not just an economic issue; it’s a social one. When industries suffer, people lose jobs. When prices go up, inflation eats away at household incomes. The combined pressure of unemployment and rising living costs creates a sense of hopelessness, especially among the working class. Pakistan needs to rethink its energy pricing model. While IMF conditions are binding, the government must negotiate space to protect its industrial backbone. Long-term solutions include investing in local energy production—especially renewables like solar and wind—to reduce dependency on imports. Improving the efficiency of the power sector, eliminating corruption, and cutting transmission losses could also bring down prices. Additionally, differential pricing strategies could be introduced, where export-oriented or essential industries get access to energy at subsidized rates to help them stay competitive. Other countries have done it, and there’s no reason Pakistan can’t follow suit. In conclusion, energy prices are not just a line item in the national budget—they are a make-or-break factor for industrial growth. If Pakistan continues on its current path of unchecked price hikes under IMF pressure, it risks dismantling the very industries it needs to climb out of its economic troubles. There is still time to strike a balance between fiscal responsibility and economic growth, but that window is closing fast. The message is clear: affordable energy is not a luxury—it’s a necessity for survival and growth.