By Tahir Amin

Copyright brecorder

ISLAMABAD: The Pakistan Association of Large Steel Producers (PALSP) has sought Special Investment Facilitation Council (SIFC)’ intervention for the release of incremental power relief to Karachi-based industry, saying the delay has already cost producers around Rs 150 billion.

In a letter addressed to SIFC Director General, also copied to SIFC Chief Coordinator, a copy of which is available with Business Recorder, PALSP stated that the association knocked the door of every government department for the resolution of the issue. However, despite all efforts, there is no light at the end of the tunnel as every effort is falling on deaf ears.

It further stated that in desperation to resolve this matter, several high-profile meetings were held with the senior officials of SIFC, NEPRA, K-Electric as well as the Power Division. However, nothing seems to be moving ahead. This situation is resulting in immense pain and suffering for the Karachi-based industry in general and the steel industry in particular.

The association requested for expediting the process to ensure justice and fair play and to end discrimination with the Karachi-based industries.

The association noted that for over two years, Pakistan’s largest steel producers have been pleading for relief under the government’s Incremental Power Subsidy Package, but Karachi’s industries remain trapped in bureaucratic limbo, bleeding billions in losses while ministries and regulators in Islamabad point fingers at each other instead of releasing the relief.

PALSP in a series of letters to the Ministry of Finance, NEPRA, SIFC and the Prime Minister’s Secretariat, accused the government of discrimination against Karachi-based industries. At the heart of the dispute is the delayed release of subsidies meant to offset incremental electricity consumption costs, a scheme first announced to keep industries afloat during the post-COVID recovery, it added.

While industries in Punjab and other provinces received relief, Karachi’s producers, falling under the K-Electric, were left exposed. Out of a package valued at around Rs 42 billion, PALSP pointed out that 83 percent of the undisputed subsidy is owed directly by the government, while only 17 percent relates to K-Electric’s litigation. Yet, the entire sum has been withheld on different excuses.

The government released power subsidies to industries in the rest of the country under the Covid-relief plan (fiscal year 2020-23) but disbursed only Rs 9 billion to Karachi against an allocation of Rs 42 billion, according to reports from trade associations and FB Area Industries. The remainder was held up because of disagreements between K-Electric and regulatory authorities.

It further stated that the Finance Ministry itself admitted before the Senate Standing Committee in February 2025 that there was “absolutely no delay” in releasing funds from its side, revealing that K-Electric had already been receiving more subsidies than other utilities.

The Committee chairman directed the Power Division to resolve the issue—but little has moved since.

PALSP called the impasse a “glaring discrimination” that crippled Karachi’s competitiveness. The steel industry, where electricity is the second-largest input cost, has borne the worst impact, with estimated losses of Rs 150 billion. Litigation tactics by K-Electric and institutional inertia at NEPRA have only prolonged the ordeal. Even when Nepra’s appellate tribunal dismissed KE’s appeals with cost, enforcement never followed.

The government fails to release funds despite confirmed allocations in fiscal year 2021–22 (Rs22 billion), fiscal year 2022–23 (Rs13 billion), and fiscal year 2023–24 (Rs7 billion). The total subsidy for the period between July 1, 2021, and October 21, 2023, is Rs33 billion, of which Rs23 billion is undisputed. However, legal and administrative delays, especially involving K-Electric, have stalled its release, it added.

Copyright Business Recorder, 2025