The country’s textile industry has approached the government at the highest level for withdrawal of a Power Division’s summary regarding recovery of Rs 21 billion at Rs 1.80 per unit.According to a letter written by APTMA’s Executive Director, Shahid Sattar to Secretary to the Prime Minister, Azam Khan, Minister for Power, Omar Ayub and other authorities, the Association asserted that realizing that the power tariffs for industry in Pakistan are well above regionally competitive tariffs the government notified a tariff of 7.5 cents/ kwh in Jan 2019 in SRO 12, 2019.

Since July 2019, the Discos are charging a quarterly adjustment of Rs 1.80 in addition to the 7.5 cents. The setting of tariff in cents was done so that the increase in tariff occurs automatically whenever there is devaluation of the rupee and to provide a stable internationally competitive rate.

In this particular case an additional rate of Rs 1.2 per unit for the zero-rated industry was already being levied raising it from Rs 11.38/kwh to 12.33/kwh as per the actual calculations.

“We can’t understand the logic of charging another Rs 1.80 on top of this which is defeating the purpose of a dollar based competitive tariff,” the letter stated.

Furthermore, 7.5 cents tariff was specifically approved by the ECC and the Cabinet. It is surprising that a decision of the government was altered without getting approval of the ECC and Cabinet. The situation now is that industry is not sure of its costing as energy forms a significant proportion (35 percent) of the conversion cost. Under these uncertain conditions the government instead of facilitating, providing a regionally competitive energy tariff and ease of doing business is actually doing exactly the opposite. The Prime Minister’s and the government’s initiative to facilitate exports is being frittered away,” the letter concluded.

On Wednesday, Shahid Sattar also met Secretary Power Division, Irfan Ali, who agreed that the proposal of recovery of Rs 21 billion from zero-rated industry is unjust but added that the Ministry is going for this proposal due to limited fiscal space. The Ministry is not being given the agreed subsidy. The textile industry is facing similar issues with respect to supply of gas to the zero-rated industry.