APTMA fears massive closures if competitive energy tariff not allowed

APTMA fears massive closures if competitive energy tariff not allowed


APTMA fears massive closures if competitive energy tariff not allowed

 LAHORE (Web Desk) – Chairman of All Pakistan Textile Mills Association (APTMA) North Zone Hamid Zaman has feared massive closures and retrenchment of textile workers in Regionally Competitive Energy Tariff (RCET) of 9 cents/kWh for electricity and $9/MMbtu for gas for the export sector not allowed by the government across the country.

He was addressing a post-budget press conference at the Zonal office of the association on Monday. Senior Vice Chairman APTMA Kamran Arshad, Vice Chairman Asad Shafi, Secretary General APTMA Raza Baqir and other senior members of the association were also present on the occasion.

“The electricity supply should be made to the textile industry at the actual cost of service (excluding cross-subsidy) and a level playing field should be ensured in the supply of gas to maintain competitiveness across the country and internationally,” Zaman stressed.

Hamid Zaman said as per NEPRA, the actual cost of electricity is Rs 23/kWh (¢8.2/kWh) for B3, B4 consumers. This cost includes CPP, EPP, T&D and service charges, which is enhanced to above Rs 40/kWh after adding cross subsidies, capacity payments to IPPs, line losses, power thefts, financial and other charges. It would be unjust and unfair to pass on the cost of such inefficiencies and maladministration to export industry with 100% recovery of bills and zero losses, he added.

“Charging electricity tariff of ¢16/kWh after including cross subsidies is highest in the region,” he said and added that electricity tariff in India is ¢8/kWh, ¢10/kWh in Bangladesh and ¢6/kWh in Vietnam respectively.

Furthermore, he said, the RCET is not subsidy. It is determined after excluding cross subsidies as cross subsidies cannot be exported.

The APTMA chairman said a recent study of Pakistan Institute of Development Economics (PIDE) has warned of deindustrialization in Punjab, as the impact of withdrawal of Regionally Competitive Energy Tariff (RCET) would be disastrous in terms of laying off workers, decline in investment, exports share, contraction in profit margin and overall industrial output. The study has concluded that increase in electricity tariff for the industry is in fact a cross-subsidy from industry to other sectors with no legal, economic or technical justification.

Chairman North zone said the industry has earned $16 billion exports during the current fiscal year against a target of $25 billion in the absence of government support. The textile exports surged to $19.3 billion last fiscal year to a supportive attitude of the government had been supportive to its growth.

According to him, continuation of RCET would facilitate upsurging exports to $ 50 billion in next five years as the textile sector has planned to setup 1000 garment plants in SME sector by investing $ 7 Billion yielding annual exports of $ 20 Billion and providing employment to well over 700,000 workers.

He said the country would face further deterioration in the balance of payment crisis as pulling out of RCET would result in a loss in exports of $10 billion per annum. It would also lead to disruptions in the investment plan of the industry for setting up of 1000 garment units to create millions of new jobs, he added.

The APTMA chairman sought cost of service-based tariff for export sector, saying that the RCET for electricity @ ¢9/kWh and gas @ $9/MMBTU should be restored for export-oriented sectors for the next financial year.

He said enough amount can be allocated for RCET in energy subsidy of Rs 1074 billion fixed for the next fiscal year. He has also sought application of uniform gas price for export industry throughout the country by implementing WACOG passed in February 2022.

He said 30% of Punjab based textile industry has already closed partially and complete shutdowns are increasing day by day. Closure would result in loss of $10 billion exports per annum.700,000 employees have already lost their jobs in the textile sector alone and millions more are expected to be laid off, he added.