'Energy costs threatening Pakistan’s industries'

Former finance minister and Pakistan Peoples Party (PPP) leader Saleem Mandviwala has warned that high energy costs are the biggest challenge facing industries, making business operations unviable in Pakistan.

Speaking on a podcast with Kamran Khan, Mandviwala said the rising cost of doing business and expensive inputs were squeezing the industrial sector.

“Large groups, textile mills, and major projects are all struggling with electricity prices,” he said. “Some are shifting to solar, others to wind power, because survival is uncertain.”

He compared Pakistan’s electricity rates with regional competitors, pointing out that China offers power at PKR 8 per unit and Bangladesh at PKR 20, while Pakistani businesses are burdened with rates between PKR 60 and PKR 80 per unit.

“How can we compete with the world at these prices?” he asked, emphasizing that high interest rates are a secondary issue compared to energy costs.

Privatization of DISCOs

Mandviwala also stressed the need to privatize power distribution companies (DISCOs), a long-standing issue he attempted to resolve during his tenure.

“K-Electric’s recovery rate is above 95%, while some DISCOs can’t even recover 40%. How will the system function without proper revenue collection?” he said.

Despite repeated claims by successive governments to push through privatization, Mandviwala remains skeptical. “I’ve heard for 10 years that DISCOs will be privatized, yet it never happens. Either there’s an unseen mafia preventing it, or there’s no real intent to carry it out.”

He warned that unless the energy sector is fixed, it could lead to an economic collapse. “The private sector will find alternative solutions, but the government’s system is already failing. People are generating their own power, with 4,500 megawatts now coming into the grid via net metering, yet the government is considering slashing net metering rates because it doesn’t know what to do with the surplus.”

Privatization of PIA

Mandviwala expressed doubts over the sincerity of the government’s efforts to privatize Pakistan International Airlines (PIA). “There seems to be a deliberate attempt to stall the process. The government’s conditions for buyers are unrealistic, making privatization nearly impossible,” he said.

He questioned why any investor would take on PIA’s liabilities alongside the purchase, calling it an irrational demand. “There is no clear commercial model for PIA’s revival,” he added.

SBP’s unclear approach to cash circulation

Mandviwala also criticized the State Bank of Pakistan (SBP) for its vague responses on controlling cash in circulation. “Every time we raise the issue in committee meetings, the SBP gives an unclear answer, saying that Pakistan’s cash economy cannot be suddenly restricted.”

He argued that a long-term plan is needed to curb excessive cash flow. “We should at least develop a 10-year strategy to reduce cash in circulation. One of the core issues is taxation—people don’t want to become taxpayers because of the flawed system,” he said.

FBR’s spending and governance issues

Mandviwala highlighted financial mismanagement within the Federal Board of Revenue (FBR), particularly its recent decision to purchase PKR 6 billion worth of vehicles from a single manufacturer without proper procurement procedures.

“This is outrageous. No quotations were taken, no competitive process was followed. It’s a massive scam,” he said, questioning why only 1,300cc vehicles were selected. He welcomed the finance minister’s intervention in halting the purchase and forming a review committee.

He also slammed the FBR’s inefficiency in revenue collection. “Pakistan’s worst service is the police, and the second worst is the FBR. Every second official promoted within the FBR has corruption allegations. How do you expect revenue to grow?”

Zardari’s China visit

Discussing President Asif Ali Zardari’s recent visit to China, Mandviwala said security concerns and CPEC revitalization were key topics. “Security is the primary issue now. In the past four to six years, CPEC slowed down due to governance problems, not security. But now, both must be addressed.”

He emphasized the need for a solution in Balochistan, noting that Chinese officials are also pressing Pakistan’s federal government to focus on the province. “The Chinese are even willing to help resolve Balochistan’s issues if the government cannot.”

National govt: The only way forward?

Reflecting on the state of governance, Mandviwala suggested that a national government might be necessary if the current administration continues to struggle.

“If we withdraw, the government collapses. But if the system isn’t working, we need to consider a national government where all parties have representation,” he said.