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ISLAMABAD: The Federal Cabinet has approved revised Textile and Apparel Policy 2020-25, after resolution of dispute between Commerce Ministry and Energy Ministry on energy (electricity and RLNG) prices for the textile and apparel sector.

According to official documents, the new language of para 2.2.2 of page 215 will now be as follows “energy (electricity and RLNG) will be provided to the export-oriented units/ sectors of textiles and apparel industry at regionally competitive rates throughout the policy years.” The decision further says that an exercise will be conducted by Ministry of Commerce jointly with the Ministry of Energy (Power and Petroleum Divisions) and the Finance Division during pre-budget consultative sessions annually to review the energy tariffs.

“The rates may be revised on an average of energy prices for industrial consumers of regional competitors and announced in federal budget along with budgetary allocations by Finance Division as actually required by Ministry of Energy so that energy regime would remain fully funded throughout the policy years. For the captive and the cogeneration units, a separate policy will be made by the Ministry of Energy in consultation with the Ministry of Commerce and Finance Division”.

The original language in the draft policy was “energy (electricity and RLNG) will be provided to the export oriented units/ sectors of textile industry at regionally competitive rates throughout the policy years without any disparity among the provinces. During FY 2021-22, electricity will be provided at US cents 9 per kWh all-inclusive and RLNG at US$ 6.5 per Mmbtu al-inclusive. However, an exercise will be conducted jointly with the Ministry of Energy (Power and Petroleum Divisions) during pre-budget consultative sessions annually to review the energy tariffs.

In case of abnormal fluctuations in regional energy prices, rates may be revised on an average of energy prices for industrial consumers of the regional competitors (Vietnam, Bangladesh, etc.) and announced in Federal Budget along with budgetary allocations by Finance Division as actually required by Ministry of Energy so that energy regime would remain fully funded throughout the policy years.”

In para VI (a) on page 8, “without any disparity among provinces” will be deleted. The original language was “supply of energy (electricity and RLNG) to export oriented units/ sectors of textile industry at regional competitive rates throughout the policy years without any disparity among the provinces.”

On page 24, of the draft policy, ‘Financial Matrix’ will be deleted. This matrix was related to rates of RLNG and electricity.

Textile and Apparel Policy stands approved by Cabinet: MoC

Ministry of Commerce has undertaken an exercise of through consultations with private stakeholders and proposed to set an export target of $ 20 billion for the textile and apparel industry FY 2021-22 and this target has also been approved by the Prime Minister.

The export target for FY 2021-22 is further cascaded till FY 2024-25 with a projection to double textiles and apparel exports to $ 40 billion. However, strong resolve and long-term commitments from Federal Government, robust implementation of policy interventions by relevant Ministries/ Divisions/ Departments and full fiscal support from the Finance Division would necessarily be required to keep intact the due support on proposed interventions throughout the policy years to achieve set milestones.

During the ensuing discussion, it was suggested that the word “energy regime” in the proposed amendment in para 2.2.2 may be substituted with “energy subsidy”. The forum agreed to the proposal. The Chairman ECC observed that there should be a separate policy for the Captive and Cogeneration Power Plants.

The Finance Division indicated that the policy of captive and cogeneration power plants was pending since long. Therefore, direction should be given to the Ministry to complete it within two weeks. The ECC further directed the Petroleum Division to formulate a separate policy for captive and cogeneration units within two weeks, after due consultation with the Petroleum Division, the Finance Division and the Ministry of Commerce, and submit it to the ECC for consideration.

Finance Minister who presided over the ECC meeting on February 9, 2022 also desired that a policy framework must be developed for each sector to attract long term investments.

Copyright Business Recorder, 2022

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Mumtaz Hassan Feb 16, 2022 12:22pm
Major point of discussion in this news item is cost of energy. It seems energy cost would be a focal area of Textile and Apparel Policy 2020-25. It is ironic after investing so heavily and building huge infrastructure of power plants which have enormous unutilized capacity, government has to concentrate more on energy cost than inducing export oriented sector to explore new markets.
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