Telecom Operators Set to Receive Industrial Electricity Tariffs as Government Nears Agreement

The Pakistani government is moving closer to extending industrial electricity tariffs to telecommunications infrastructure, a step that could significantly reduce operating costs for cellular operators and accelerate investment in 5G networks. Prime Minister Shehbaz Sharif has instructed a special task force to finalize recommendations on the matter, according to sources familiar with the development.

The Prime Minister's Office has asked the task force to consult with the Power Division and Finance Division and submit recommendations covering the financial implications and a proposed mechanism to absorb the tariff differential. This follows a joint appeal by the chief executives of Jazz, CMPak (Zong), PTMIL (Ufone and Telenor), and PTCL, who urged the government to extend industrial electricity rates to licensed telecom infrastructure.

The operators argue that telecommunications has long been recognized as an industry under government policies and legislation but continues to face commercial electricity rates. They point to the Mobile Cellular Policy, 2004, a Ministry of Industries and Production notification from April 20, 2004, and the Finance Act, 2021, which amended the Income Tax Ordinance to include PTA-licensed telecom operators in the definition of an industrial undertaking. They also cite a 2018 NEPRA precedent that extended industrial tariffs to dairy and poultry farms.

According to the telecom CEOs, commercial electricity tariffs for telecom sites have increased approximately 197 percent since 2018, while fuel costs have risen around 300 percent. Average revenue per user has declined approximately 22 percent over the same period, along with an additional 5 percent withholding tax burden. The companies say these rising energy costs are making investments in 5G, fiber connectivity, and AI-ready data centers increasingly difficult.

The operators have committed approximately $2 billion in investments over the next three years for 5G deployment and fiber expansion, alongside investments in AI-ready, Tier III data centers. They argue that lower electricity costs would allow them to redirect savings toward 5G deployment, rural connectivity, and fiber-to-the-home expansion. They also claim that industrial tariffs could encourage greater reliance on the national electricity grid instead of solar and other off-grid arrangements.

Industry projections suggest that extending industrial tariffs could reduce the growth of solar off-grid operations from 15 percent to 5-7 percent while increasing grid utilization by 15-20 percent. Operators estimate that higher electricity consumption could offset potential revenue losses for distribution companies within two to three years. These figures are industry estimates and have not been independently verified. A task force headed by the Secretary of the Ministry of IT and Telecommunication was established on June 29, 2026, to examine industrial power tariffs, smart grid solutions, and dedicated electricity feeders for telecom infrastructure.