Technology and Business News from Pakistan

Textile sector urges Power Division to withdraw SRO

Spokesperson of Power Division while clarifying the content of letter by APTMA regarding Textile Sector, in a statement said that the Federal Government, vide S.R.O. No. 12(I)/2019 dated January 01, 2019 provided an incentive to a specific category of consumers, namely, zero rated industrial consumers, to the effect that, in respect of electricity base tariff for XWDISCOs recommended by NEPRA and notified by the Federal Government vide S.R.O. Nos. 01 to 10(I)/2019 dated January 01, 2019 and S.R.O Nos. 11(I)/2010 dated January 01, 2010 for K-Electric, such category of consumers shall make payment up to the rate of 7.5 cents/kWh (the “Concessionary Rate”). The difference between the base tariff and the Concessionary Rate was to be plugged in/contributed by the Federal Government per the notification for rationalization of process of payment of subsidy. This aspect is clearly spelt out from a bare reading of S.R.O. No. 12(I)/2019 dated January 01, 2019.

At  present, approximately benefit of Rs. 7.30/kWh is being given in lieu of the Peak Units and Rs. 1.50/kWh is being given in lieu of Off-Peak Units to all such consumers, strictly in terms of S.R.O. No. 12/(I)/2019. This subsidized regime is continuing and not been withdrawn.

For completeness, it is pointed out that upon issuance of the S.R.O. No. 12/(I)/2019, APTMA made various representation to the Federal Government with respect to further subsidy by way of capping of the Concessionary Rate as the only tariff payable by zero rated industrial consumers. The representations made by APTMA and the financial implications of the matter were discussed with the Finance Division and other concerned divisions, including, Ministry of Commerce and Textile. On account of no budgetary allocation for the purposes of the demanded relief in FY 2018-2019 or in the current financial year, the Finance Division communicated that, being pass-through items, the same should be duly recovered as per tariff notifications from industrial consumers, as the subsidy is only meant for furtherance of pro-poor Government policy. Accordingly, after due deliberations between various government division, and approval from the Federal Government, it was declared that the erstwhile zero rated sectors would be notified as “Export Oriented Sectors”, which will continue to remain entitled to the above subsidized package.  However, further additional subsidy claimed in the context of all remaining components of cost/price of electricity would be recoverable from such consumers per the notified tariffs, after incentivizing the base rate through the Concessionary Rate as explained above, which differential is already being provided by the Federal Government from the allocated subsidy. In additional, this sector is also getting commercial rate of gas supply. It is quite clear that base tariff of 7.5 ¢ is being maintained for the “Export Oriented Sectors” and to maintain the base tariff, an element of subsidy to cross subsidy has been introduced. The additional costs reflected periodic adjustment are not covered by such subsidies and if they are not charged to the “industry”, the burden would have to be shared by the domestic, agricultural and commercial consumers. While the GoP is fully committed to promote export for which the base tariff is being maintained, it is important to protect the aforementioned sector from the burden of future x-subsidies.

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