The steel industry in Pakistan is struggling due to high electricity costs and unfair capacity charges. Many steel plants have shut down, and the remaining ones are barely operating.
The Pakistan Association of Large Steel Producers (PALSP) urges the government to renegotiate agreements with Independent Power Producers (IPPs) and address inefficiencies in the power sector. They recommend converting the Return on Equity (ROE) from dollar-based to rupee-based for government-owned RLNG plants and restructuring debt for new coal plants to reduce financial strain on consumers and save the industry.
PALSP highlights that some IPPs receive billions of rupees in capacity charges without producing electricity, contributing to the industry’s financial burden. They suggest providing cheaper electricity to industries to utilize idle power plants effectively.
Electricity prices in Pakistan are significantly higher compared to regional countries, making it hard for industries to operate. If the IPP issue isn’t resolved soon, it could lead to the permanent closure of the steel industry, affecting related industries and causing widespread job losses.
