Karachi steel industry warns of PKR150B losses over power subsidy delay

Karachi’s industrial sector, particularly the long steel industry, is facing severe financial strain due to prolonged delays in the release of the Incremental Power Consumption Subsidy, Pakistan Association of Large Steel Producers (PALSP) has said in a letter to Finance Secretary Imdad Ullah Bosal.

In the letter, a copy of which is available with Nukta, the association urged the Ministry of Finance to immediately approve and release the undisputed portion of the subsidy, saying continued delays have inflicted an estimated cumulative loss of approximately PKR 150 billion on Karachi-based industries.

“The inordinate delay has imposed substantial economic hardship on Karachi-based industries, considerably weakening their competitiveness relative to industry in other parts of the country,” Syed Wajid Bokhari, secretary of the Pakistan Association of Large Steel Producers wrote, calling for urgent intervention.

The Incremental Power Consumption Subsidy Package was initially approved for the period from November 2020 to June 2021 and later extended nationwide from July 2021 to October 2023 for all industrial consumers of distribution companies (DISCOs), except industries in Karachi served by K-Electric.

According to the association, officials from the Power Division had previously suggested that the delay was due to the government’s non-release of funds. However, this position was contradicted during a Senate Standing Committee on Finance hearing on Feb. 26, 2025, when Additional Secretary Finance Qumar Sarwar Abbasi clarified that there had been no delay on the part of the government or the Finance Ministry in releasing subsidy payments to K-Electric.

PALSP noted that although K-Electric has challenged the Incremental Orders in the Islamabad High Court, the disputed amount accounts for less than 17% of the total payable subsidy. The remaining majority share is undisputed and independent of the ongoing litigation, the association said, and should therefore be released regardless of the court’s eventual ruling.

Despite reconciliation of figures by the National Electric Power Regulatory Authority (NEPRA) and the Ministry of Energy (Power Division) under the directions of the Special Investment Facilitation Council (SIFC), Bokhari said there has been no meaningful progress in disbursing the undisputed subsidy component to affected industries in Karachi.

Describing the steel sector as one of the largest electricity-consuming industries — where energy represents the second major cost of production after raw materials — Bokhari said the sector has been disproportionately affected.

The association said it has already appealed to the prime minister, the president of Pakistan, the chief minister of Sindh and the SIFC, but the issue remains unresolved.

Calling the continued delay discriminatory, Bokhari urged the Finance Ministry to take immediate action to release the pending funds, terming it essential to restoring parity and providing much-needed relief to Karachi’s industrial sector.