Cables contribute to energy crisis

Amer Azam, Director, New Age Cables - a private company manufacturing house wiring cables - completed his undergrad from the University of Tampa, Florida. He has 23 years of experience in manufacturing and marketing, and also has various short courses on production management to his credit.
Cables contribute to energy crisis That the government is responsible for the energy crisis in the country is no breaking news. But that the governments electric cable purchases are also leading to power shortage, is indeed an information held by only a few.
"The challenge for us and the country at large is that in a lot of places impure copper is used in cables. If the country produces 30,000 MW of electricity, only 20,000 MW is delivered because of our overall poor transmission system," Amer Azam, a director at Newage Cables told BR Research.
Azam added that since government departments purchase substandard and tax evaded materials, the organised sector is being affected. In other words, Azam says, the secondary market for low quality products is being supported by the government.
"The Punjab government is the biggest buyer of tax evaded material. The government has no systems in place and is buying from low quality cable producers," said Azam, informing that in Lahores private sector alone there are 400 cable manufacturers, out of which only 1 or 2 use pure copper in cables. "This creates line loses in the internal wiring of houses and offices."
The informal cable sector is reported to be "30 to 50 percent cheaper and therefore more profitable...and in government departments anyone can get registered as a cable supplier because there is no procedure".
And knowing that "50-60 percent of Pakistans cable production is used by the public sector, including Wapda, and other government departments and ministries" according to Azam, the extent of line and transmission losses must be significant.
Azam, whose firm has a 30 percent share of the Rs20 billion local cable industry, says that a major challenge related to his industry is the presence of the huge cottage industry that depends on tax evaded material such as sub standard copper, low quality PVC and zero sales tax.
Does this mean that he is for RGST? "Well, we already pay sales tax and excise duty. We will benefit if the undocumented sector comes into the tax net as it will help reduce the price differential," said Azam.
Yet, Azam says that the proposed form of RGST is not suitable. "They have given powers to inspectors who can arrest people on tax evasion. I think it will increase corruption...the arrest powers should be with a magistrate or a high court judge who can look into the case and give punishment," he said.
Sticking to the subject of effective governance, Azam regrets the fact that weak governance has given room to the grey economy. "You pick any industry and you will see that products are being smuggled duty-free and are being sold at low prices," says Azam, adding that the bureaucracy is not making the job any helpful.
"If we can stop smuggling, then there is a huge demand to be filled by local businessmen and then there can be so much employment creation," he said, adding that under-invoicing by the business community often goes hand and glove with the government employees.
GROWTH PLANS Over the course of years, Newage cables has exported to Vietnam, Sri Lanka Kenya, Kuwait, Saudi Arabia, UAE, Afghanistan and Sudan, albeit they have taken Sudan off the list because it is on the anti-terrorist watch list and has sanctions.
Newages next stop would be Qatar. "There is much potential in the Middle East especially Qatar, where they are going to spend $50 to $70 billion over the next eight years because of the FIFA World Cup in 2022," he said, adding that the major challenge, however, is to contain cost because "gas load-shedding forces the firm to run on furnace oil" which increases the cost of production.
Keeping this handicap in mind, Azam says the strategy for Newage is to "work on cost cutting," as it will further help the firm penetrate the growing cable market of the country.
"Pakistan is an under developed country and therefore has potential for growth. Our villages have to be electrified in the future, and if there are right government policies, there will also be industrial growth in the future," said an optimistic Azam, adding that "Pakistan is a good place for local businesses because foreign companies have been shying away from investing and setting up plants in the country".
Interview by Ali Khizar Aslam