Steel sector reports Rs150 billion losses as power subsidy remains frozen for Karachi-based units

The steel industry has reported losses of nearly Rs150 billion, attributing the impact to the continued freeze on incremental power subsidy for Karachi-based industries despite official statements that funding constraints were not responsible for delays.

According to a news report, the Pakistan Association of Large Steel Producers, in a letter dated February 9, 2026, urged the Ministry of Finance to resolve the matter on an urgent basis. The letter, addressed to Finance Secretary Imdad Ullah Bosal, warned of financial strain on manufacturers and potential economic fallout if the issue remains unresolved.

Copies of the correspondence were also sent to senior federal and provincial authorities, including the offices of the prime minister and president, the Sindh chief minister, the power minister, the special assistant to the prime minister for industries, the national coordinator of the Special Investment Facilitation Council, the chairperson of Nepra and the Senate Standing Committee on Finance.

The issue gained attention during a Senate Standing Committee on Finance meeting on February 26, 2025, when Additional Secretary Finance Qumar Sarwar Abbasi stated that there had been no delay by the government or the finance ministry in releasing subsidy payments to K-Electric. His remarks differed from earlier claims by Power Division officials who had cited non-release of funds as the reason for delay.

Despite the clarification, industry representatives say Karachi-based manufacturers, particularly in the long steel segment, have not received relief. Although K-Electric has challenged certain incremental power orders in the Islamabad High Court, industry sources maintain that the disputed amount represents less than 17 per cent of the total subsidy, while the remaining portion is undisputed and independent of court proceedings.

Subsidy figures have already been reconciled by Nepra and the Ministry of Energy under the supervision of the Special Investment Facilitation Council, but no action has been taken to release the undisputed amount, according to industry sources.

Manufacturers state that electricity is the second-largest cost component after raw materials in steel production. Prolonged exposure to higher tariffs has led to operating losses, delays in expansion and reduced capacity utilisation.

Industry representatives warn that continued delays may result in plant shutdowns, job losses and lower domestic steel output. They have called for immediate approval and disbursement of the undisputed subsidy amount, saying further inaction could affect investor confidence in Karachi’s industrial sector.