Rising energy costs threat to industry, say experts

ISLAMABAD, (UrduPoint / Pakistan Point News - 11th Mar, 2026) Experts at a webinar called for a gradual shift from gas to electricity and renewable energy to safeguard long-term

industrial competitiveness, as Pakistan’s industrial sector is under severe pressure due to rising global energy costs

prices, structural inefficiencies, and policy constraints.

The webinar, titled “Rising Energy Costs and the Future of Sustainable Industry in Pakistan,” was organized by

Sustainable Development Policy Institute (SDPI), said a press release.

Dr Sajid Amin Javed, SDPI Deputy Executive Director, said there is an uncertainty about oil price fluctuations and availability. Markets now anticipate three possible trajectories: a 50% probability of prices reaching USD 130-150/bbl in the near term, a 10-20% chance that they will maintain this level for 6-8 months, and a 30-40% likelihood of stabilizing around USD 110-120/bbl (with most likely USD 110 as the expected average).

For Pakistan, he said, this could cause 10-12% inflation, an increase in import bill by roughly USD 6 billion, and a slowdown in GDP growth to 2.5-2.8%, while prolonged LNG disruptions, particularly given reliance on Qatari supply, would place additional pressure on energy-intensive industries.

Engr Ubaid ur Rehman Zia, Head of Energy Unit at SDPI, said there are three waves of impact: first, a structural sickness as rising energy costs and IMF-mandated reforms disrupted industries reliant on self-generation and shifted energy toward non-productive uses; second, a “relief that wasn’t,” where a February 2026 tariff cut of nearly Rs 4 per unit was largely offset by a Fuel Charges Adjustment (FCA) of Rs 1.78, compounded by a Rs 1,243 per MMBtu levy on off-grid captive power, prompting formal protests from textile exporters over competitiveness; and third, the ongoing geopolitical shockwave, with WTI crude swinging from approximately USD 75 to USD 110 per barrel before settling at USD 84-90, signaling structural uncertainty. He called for an urgent need for policy reforms, industrial electrification, and renewable energy adoption.

Ms Saleha Qureshi, Lead of the Pakistan Industrial Decarbonization Programme at SDPI, noted that LNG prices have surged to $15.77 per mmbtu and Pakistan imports approximately 80 per cent of liquid fuels and 20 per cent of its power mix, increasing the system’s vulnerability.

Rising petrol prices, with the recent hike of around Rs55 per litre, have already pushed logistics costs up by 12 per cent, creating a “triple shock” for industries from electricity tariffs, gas prices, and feedstock costs.

Syed Mohammed Osama Rizvi, Global Market and Product Strategist at Primary Vision, said the country’s refining configuration is misaligned with demand. Most refineries still operate on outdated hydro-skimming technology, producing furnace oil rather than high-demand fuels such as high-speed diesel, leaving the economy reliant on imports for 40–45 percent of refined products.

Sheikh Mohammed Iqbal, former CEO of Pakistan Textile Council, said rising energy costs, coupled with taxes, threaten competitiveness against regional peers such as Bangladesh and Sri Lanka. He stressed that for Pakistan to compete, electricity must become cheaper and more predictable, with tariff rationalization, reduced inefficiencies, grid upgrades for reliability, and accelerated adoption of renewables, energy storage, and electric vehicle (EV) infrastructure to lower long-term costs, support jobs, and enhance industrial and transport sector competitiveness.

Muhammad Abdul Rafay from Alternate Law Collective said industries cannot be forced to choose between an unreliable grid and costly captive power. He stressed that long-term planning and not short-term cost-shifting is essential, with a flexible, investable grid, transparent pricing, and rules enabling efficient load management and renewable integration. He also noted a misalignment between national electricity reforms and the IMF’s Extended Fund Facility (EFF), creating policy uncertainty for investors and industries making long-term energy transition decisions.

Manzoor Ahmed Alizai from Policy Research Institute for Equitable Development (PRIED) outlined a two-track approach, i.e., rationalization of industrial tariffs and integration of renewable energy, ensuring the grid is strengthened and market rules allow reliable access to competitively priced electricity.

He stressed the need for a functioning system with robust demand forecasting, clear electrification targets, and credible planning so that investments in generation, transmission, and grid flexibility are made ahead of demand rather than reactively.