Pakistan’s textile industry warns that a steep gas levy hike to Rs. 1,243 per MMBtu threatens export competitiveness and risks derailing the country’s $60bn export roadmap.
Steep Gas Levy Hike Hits Captive Power Users
Pakistan’s textile industry has sounded the alarm over a sharp jump in the gas levy charged on off-grid captive power plants, warning that the move could seriously damage export competitiveness at a critical moment for the economy.
According to the Pakistan Textile Council (PTC), the levy for December 2025 has been raised to Rs. 1,243 per MMBtu, up from Rs. 402 per MMBtu in a short span of time. Export-oriented manufacturers, many of whom rely on gas-based captive power for reliable energy, say the increase is a major cost shock that is already changing production plans.
Industry Says Policy Clashes With $60 Billion Export Target
Textile leaders argue that the timing of the levy is particularly damaging because Pakistan is targeting $60 billion in exports under its economic roadmap. They say that raising energy costs for key export sectors runs directly against this goal.
Instead of supporting growth, industry representatives claim the current policy mix is pushing factories toward lower utilisation and discouraging fresh investment. They warn that if gas prices remain unpredictable and elevated, Pakistan will struggle to compete with regional rivals that offer more stable and affordable industrial energy tariffs.
Energy Pricing Uncertainty Raises Financing Risks
PTC Chairman Fawad Anwar has criticised the levy for introducing another layer of uncertainty into energy pricing. He points out that the charge sits on top of regulator-notified tariffs, creating a moving target that is difficult for businesses to model.
This unpredictability, the industry says, makes it harder for investors to plan long-term projects, for businesses to manage working capital, and for banks to extend credit to exporters. When fuel costs can be altered through ad hoc levies, lenders face greater default risk and are more cautious in financing industrial operations.
The sector also highlights knock-on effects in the gas system itself. With higher costs and weaker demand from export industries, domestic gas curtailment has reportedly reached around 300 MMCFD, LNG cargoes are being diverted, and utilities are dealing with lower throughput and potential system stability issues.
Efficiency Penalties and Cross-Subsidies Under Fire
One of the strongest objections from textile stakeholders relates to how the levy is structured. It applies equally to all captive power plants, including high-efficiency cogeneration systems that use fuel more effectively and emit less than conventional setups.
Industry players argue that, globally, cogeneration and other efficient technologies are usually incentivised, not penalised. Treating them the same as less efficient plants, they say, sends the wrong signal on energy conservation and climate goals, and undermines previous investments in cleaner equipment.
There is also concern about where the levy proceeds are going. Exporters say the additional revenue is being used to subsidise electricity tariffs for other consumer categories. In their view, this effectively shifts the financial burden onto export-oriented industries, raising questions about fairness and whether such cross-subsidies make economic sense.
What Textile Exporters Want the Government to Do
In response, the Pakistan Textile Council has called on the government to review the levy framework and restore regulator-based pricing as the main guide for industrial gas rates. They argue that transparent, predictable prices are essential if Pakistan wants to unlock new export capacity and hit its $60 billion target.
The industry also wants policies that recognise and protect efficient energy systems, rather than treating all captive power plants the same. Aligning gas and power costs with export competitiveness, stakeholders say, would not only help safeguard current orders and jobs but also attract the investment needed to grow Pakistan’s textile footprint in global markets.
