ISLAMABAD: Karachi’s industrial base has lost an estimated Rs150 billion over the past two years as the release of government-sanctioned power subsidies remains stalled, with K-Electric, regulators, and ministries in Islamabad caught in a prolonged blame game.
The Pakistan Association of Large Steel Producers (PALSP), in a letter to the Ministry of Finance, NEPRA, the Special Investment Facilitation Council (SIFC), and the Prime Minister’s Secretariat, accused the government of “glaring discrimination” against Karachi-based industries. The dispute centers on the Incremental Power Subsidy Package, announced during the post-COVID recovery to offset higher electricity costs for manufacturers.
While industries in Punjab and other provinces have benefited from the package, Karachi producers dependent on K-Electric were left out. Of the Rs42 billion allocated for Karachi, only Rs9 billion has been disbursed. According to PALSP, 83 percent of the undisputed subsidy is owed directly by the government, while just 17 percent is tied up in K-Electric’s litigation. Yet, the entire amount remains blocked.
The Finance Ministry told the Senate Standing Committee in February 2025 that there was “absolutely no delay” on its part and argued that K-Electric had already received more subsidies than other utilities. The Committee directed the Power Division to resolve the matter, but little progress has been made.
PALSP said the inaction has crippled the competitiveness of Karachi’s industries, particularly the steel sector where electricity is the second-largest input cost. The association blamed K-Electric’s litigation tactics and NEPRA’s slow enforcement for prolonging the ordeal, even after KE’s appeals were dismissed with cost by NEPRA’s appellate tribunal.
Funds earmarked in federal budgets Rs22 billion for FY 2021–22, Rs13 billion for FY 2022–23, and Rs7 billion for FY 2023–24 have yet to be released. Out of the Rs33 billion total subsidy confirmed for the period between July 2021 and October 2023, Rs23 billion is undisputed.
The producers warned that the continued delay is eroding fair competition, investor confidence, and the survival of Karachi’s industrial base. “We have knocked on every government door and even appealed through the press, but every effort has fallen on deaf ears,” PALSP said.
For Karachi’s industries, the issue has become more than an unpaid subsidy it is now a test of whether Islamabad is willing to uphold equity across regions or allow systemic discrimination to persist under bureaucratic excuses.
