As govt sits on subsidy notification, export-oriented sectors in quandary

Hassan NaqviReporter

27th Jul, 2021. 05:31 pm
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LAHORE: The five export-oriented sectors, textiles, surgical goods, carpets, leather and sports goods, are still awaiting the new notification regarding the subsidised electricity and gas tariffs, as the federal government remained unable to issue the same, BOL has learnt on Tuesday.

The federal government has failed to issue new notification regarding the subsidised energy tariffs (9 cent/unit electricity and $6.5 per MMBtu for gas for the five export-oriented sectors, which expired on June 30, 2021.

The five export-oriented sectors are uncertain due to the delay in the issuance of the notification, despite the fact that the federal government has allocated Rs26 billion for electricity and Rs10 billion for gas in the Federal Budget 2021/22.

The Power Division has so far not presented any summary to the Economic Coordination Committee (ECC) of the Cabinet for approval.

Sources told BOL: “The summary is still with an additional secretary in the Commerce Ministry who should have moved it to the ECC for approval before or on June 30 but he has failed to do so.”

Once it is approved, it will be sent to the Federal Cabinet for approval, which will send it to the Power Division for notification.

Sources from the textile sector said 40 per cent of their entire cost is energy-related (electricity and gas). So, in such a scenario without any notification there are serious reservations and uncertainty about what energy tariff they would be paying in its absence.

Talking to BOL, Naveed Gulzar, a textile mill-owner, said that there is an uncertainty on this subject without a shred of doubt, as the notification is not yet issued.

The amount has been allocated in the federal budget for subsidy and, according to Finance Minister Shaukat Tarin, the amount has been placed under the adviser on commerce for utilisation.

“I hope as far as electricity is concerned, the notification is agreed and will be out soon,” he claimed.

Regarding gas tariff, Gulzar said that there is an uncertainty, as the government wants to push captive power users to grid power without ensuring them round-the-clock power without fluctuation, which is essential for the new machinery.

“We hope sanity will prevail if the government wants to continue the momentum of exports, and it has to come up with subsidised energy tariffs,” the textile miller added. “We are not sure that in the absence of [the] new notification, we would be charged at what rate,” Gulzar added.

Talking to BOL, Anjum Zafar, chairman of the Pakistan Tanners Association (PTA), said: “The leather exports had already declined 40 per cent from the peak level and if the government does not issue the new notification of subsidised energy tariff for leather and other export-oriented sectors, we would not be able to compete with Bangladesh, India and other regional competitors.”

“The government should issue the new notification of 9 cents/unit electricity on war-footing if we want to increase the exports of the country and compete with [the] regional competitors,” Zafar added.

Speaking to BOL, officials from Sui Northern Gas Pipeline Limited (SNGPL) and Lahore Electric Supply Company (LESCO) said that currently the billing is in progress for the month of June so in this month they will be charged as per previous subsidised energy tariff.

From next month we will wait for the circulation or new notification from the government and these five export-oriented sectors would be charged as per power sector directives in future, officials added.

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