An estimated Rs28 billion to Rs33 billion in electricity tariff relief for Karachi’s industrial sector has been withheld by authorities, creating a severe disadvantage for the city’s businesses, according to the Chairman of the Businessmen Group (BMG), Muhammad Zubair Motiwala.
In a letter to the Federal Minister for Finance and Revenue Muhammad Aurangzeb today, the BMG Chairman highlighted this disparity as part of a wider call for immediate fiscal, energy, and export-related policy interventions to shield Pakistan’s economy from escalating US-Iran tensions.
Motiwala warned that the worsening regional geopolitical situation is severely disrupting global trade, inflating freight and insurance costs, and causing significant volatility in energy markets, which could destabilise Pakistan’s already pressured economy. He conveyed the business community”s growing concern over the adverse implications for the nation”s trade and industry.
The chairman pointed to existing economic vulnerabilities, including stagnant exports, weakening industrial activity, and declining remittance inflows, which he said were being aggravated by the regional instability.
To counter these challenges, Motiwala strongly recommended the immediate restoration of the zero-rating of sales tax at the input stage for key export-oriented sectors such as textiles, leather, surgical instruments, carpets, and sports goods. These sectors, he noted, account for nearly 85 per cent of Pakistan’s total exports.
He observed that the current refund-based system has created serious working capital constraints for exporters due to delayed payment cycles. The reinstatement of zero-rating, he argued, would ensure uninterrupted liquidity and significantly boost the global competitiveness of Pakistani products.
Addressing import costs, Motiwala proposed that customs duties and taxes be assessed on the Ex-Works (EXW) value of goods rather than the existing Cost and Freight (CNF) basis. He explained that the CNF method inflates dutiable value by including freight and insurance costs, which have risen sharply due to geopolitical disruptions, and that an EXW-based system would provide a fairer and more rational taxation structure.
Expressing grave concern over energy costs, the BMG Chairman stated that Pakistan’s industrial electricity tariffs, averaging 14 to 16 US cents per kilowatt-hour, remain uncompetitive. He revealed that while the federal government had released approximately Rs7 billion for Karachi under its Incremental Consumption Package (ICP), the funds had not been passed on to industrial consumers, with a total of Rs28 billion to Rs33 billion now pending.
He demanded the immediate disbursement of these funds and the establishment of a transparent mechanism to ensure benefits are transferred directly to industries, providing much-needed liquidity relief.
On the issue of natural gas, Motiwala clarified that industries are not seeking subsidies but are demanding that gas be supplied strictly on a cost-of-service basis. He stressed that gas pricing should not be used as a revenue-generation tool and called for a transparent, predictable pricing mechanism that prioritises supply for export-oriented businesses.
To offset the growing burden of logistics expenses, the chairman called for the reintroduction of freight subsidy and export facilitation schemes. He said these would help exporters maintain access to international markets and preserve their price competitiveness against rising global shipping costs and insurance premiums.
Motiwala also drew attention to the substantial amount of exporters’ funds stuck in pending tax refunds, which he said was creating severe liquidity problems. He strongly urged the government to release all outstanding refunds on a priority basis and implement a time-bound automated system for future processing to end the financial strain on exporters.