National Tariff Commission Chairman Faizullah Khilji on Saturday observed that country's industry cannot be made hostage to power distribution companies for doing energy business, and asked the stakeholders of soda ash sector to take the matter with the government to bring electricity rates to reasonable level so that they could compete in the international market by producing low-cost products.
The NTC chairman made these remarks at public hearing in the case of cut in soda ash duty here.
Supporting the request to revise duty on soda ash upward, ICI and Olympia Chemical Industries pleaded that some countries were taking undue benefit of the reduction, and were dumping soda ash in Pakistan at much lower rates to force its industry to close down.
Pervez Khan of the ICI said that scaling down of duty on soda ash from 20 percent to 10 percent in the previous budget had adversely hit the local industry.
He added that negative impact of low duty on soda ash could be avoided by providing protection to the local industry. He demanded level playing field for all stakeholders of soda ash industry.
Khan told the NTC that ICI is 100 percent efficient as per international standards and thus increasing its production of soda ash every year.
Ali Aga of ICI said that drastic cut in duty on soda ash without any protection has adversely hit the local industry.
He wanted that the government should provide protection to the local industry for limited period so that it could become strong enough to compete with the countries enjoying cheaper inputs.
He termed high electricity and gas rates as major factors resulting in high cost of the product in Pakistan.
ICI is a major local soda ash producer. Olympia Chemical Industries, the second soda ash producer, had approached the NTC for increase in duty. Its representatives, Mumtaz Abdullah and Suleman, pleaded before the commission that local soda ash industry, being infant and in the process of expansion, needed special protection against increasing import. He said that progress and expansion of related industries like paper, glass, chemical, textile and many others were subject to survival of local soda ash industry.
The NTC chairman questioned at this point of time whether the ICI and Olympia Chemical Industries had ever raised the issue of high power tariff with the federal government and sought reduction in it.
The chairman observed that high rates of electricity, being major source of energy, drastically increased cost of production. Khilji wanted that the stakeholders of soda ash should persistently press the government for reduction in power rates.
He observed that even zero-rated import of raw material in the case of soda ash could not work to the expectations of the industrialists.
He wanted that the local industry should become efficient in true sense to boldly face its international competitors. Shaikh Iqbal of the Gang Glass presented the case of glass industry and contested the applicant's point of view that reduction in duty may force him to close down his unit.
His argument was that reduction was favouring the downstream industry and enabled it to flourish.
He added that the reduction in duty was done by the government in annual budget 2003-04 on the request of downstream industry. Imtiaz Ali Khan of Ghani Glass said that his industry was ready to give undertaking to the government that it could be competitive in the world market if duty on soda ash was further reduced.
S Anwer S Rizvi of Colgate and Palmolive (Pakistan) and Brigadier Rafi of Century Paper opposed the applicant, saying that any such step would bring downstream industry at disadvantage by increasing input cost of their products.
The stakeholders had divergent views on cut on soda ash at the National Tariff Commission (NTC) during public hearing on Saturday.
The applicant and its supporters pleaded before the commission that scaling down of duty on soda as from 20 percent to 10 percent has created a situation for the domestic industry wherein its feeling difficult to continue with its activities as the difference in rates between the imported and locally made soda ash was huge.
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