LAHORE:All Pakistan Textile Mills Association (APTMA-North Zone) Chairman Hamid Zaman on Monday sought cost of service-based energy tariff for export sector, saying that Regionally Competitive Energy Tariff (RCET) for electricity at Euro 9 per kWh and gas at US $ 9 per MMBTU should be restored for export-oriented industry in the next financial year.
He was addressing a post-budget press conference here at APTMA House where Senior Vice Chairman APTMA Kamran Arshad, Vice Chairman Asad Shafi, Secretary General Raza Baqir and other senior members were also present.
Hamid Zaman said enough amount could be allocated for RCET in energy subsidy of Rs 1,074 billion fixed for the next fiscal year. He also sought application of uniform gas price for export industry throughout the country by implementing WACOG passed in February 2022.
He added 30 percent of Punjab based textile industry had already closed partially and complete shutdowns was increasing day by day. Closure would result in loss of US $10 billion exports per annum. As many as 700,000 employees had already lost their jobs in the textile sector alone and millions more were expected to be laid off, he added.
He feared massive closures and retrenchment of textile workers as Regionally Competitive Energy Tariff (RCET) of 9 cents per kWh electricity and US $ 9 per MMbtu gas for the export sector was not allowed by government across the country.
“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,” he stressed.
Hamid Zaman said as per NEPRA, the actual cost of electricity was Rs 23 per kWh (Euro 8.2 per kWh) for B3, B4 consumers. This cost included CPP, EPP, T&D and service charges, which was enhanced to above Rs 40 per kWh after adding cross subsidies, capacity payments to IPPs, line losses, power thefts, financial and other charges. It would be unjust to pass on the cost of such inefficiencies to export industry with 100 percent recovery of bills and zero losses, he added.
“Charging electricity tariff of Euro 16 per kWh after including cross subsidies is high in the region,” he said, citing and that electricity tariff in India was Euro 8 per kWh, Euro 10 per kWh in Bangladesh and Euro 6 per kWh in Vietnam.
The RCET was not subsidy as it was determined after excluding cross subsidies as cross subsidies could not be exported, he maintained.
Chairman North zone mentioned that a recent study of Pakistan Institute of Development Economics (PIDE) warned of de-industrialization in Punjab, as the impact of withdrawal of Regionally Competitive Energy Tariff (RCET) would be harmful in terms of laying off workers, decline in investment, exports share, contraction in profit margin and overall industrial output. The study concluded that increase in electricity tariff for the industry was in fact a cross-subsidy from industry to other sectors with no legal, economic or technical justification.
The Chairman North zone said the industry had earned US $ 16 billion exports during the current fiscal year against a target of US $ 25 billion, while the textile exports surged to US $ 19.3 billion during last fiscal year.
According to him, continuation of RCET would facilitate up-surging exports to US $ 50 billion in next five years as the textile sector had planned to set up 1000 garment plants in SME sector by investing US $ 7 billion yielding annual exports of US $ 20 billion and providing employment to well over 700,000 workers.
He was of the view that the country would face deterioration in the balance of payment crisis as pulling out of RCET would result in a loss in exports of US $10 billion per annum and might also disrupt investment plan of the industry for setting up of 1000 garment units to create millions of new jobs.