Concessional power tariff: Any ‘imprudent’ decision will be disastrous for economy: PHMA

KARACHI: Central Chairman of the Pakistan Hosiery Manufacturers & Exporters Association (PHMA), Shahzad Azam Khan, on Thursday warned the PML(N)-led federal government that any “imprudent” decision to discontinue the concessional power tariff for five export-oriented sectors will be disastrous for the country’s economy.

The country’s textile, one of the five sectors, is boosting its exports with prospects of 25 percent this fiscal year, but may see “damaging” effects if the concessional power tariff was ended, he added.

The textile sector topped with $15.4 billion exports in 2020-21 that is now going to surpass $15.98 billion mark in just 10 months of 2021-22, Central Chairman, PHMA, Shahzad Azam Khan said along with Coordinator Jawed Bilwani, Zonal Vice Chairman (North) Kashif Zia, Zonal Vice Chairman (South) Abdul Rehman and members during Executive Committee meeting.

The knitwear textile has also achieved the highest exports growth of $3.8 billion in 2020-21 and grows to $4.2 billion in the first 10 months if 2021-22, up by 35 percent.

The PHMA’s Executive Committee meeting discussed the current economic situation of the country and also passed resolution to make all out efforts to help further augment the value-added textile exports to underpin the country’s ailing economy.

But, the PHMA also cautioned the federal government to avoid any “unwise” move, which may derail the growing exports.

It asked the prime minister and his economic team to ensure a level-playing field by providing concessional energy tariffs and Duty Drawback on Local Taxes and Levies as committed in the new five year textile and apparel policy.

The federal government should continue supporting the “five export-oriented sectors” for the country’s economic stability, employment creation and revenue generation.

“The value-added textile exporters want continuation of grants by the government to provide concessional energy tariffs to ensure level-playing field to export industries for the purpose of regional competitiveness and export enhancement,” the Central Chairman PHMA said.

In fact, he said, the industries are also burdened and cross-subsidized for gas tariffs to give subsidy to fertilizer and domestic sector.

“The fertilizer sector is earning huge profits in excess to subsidy amount nonetheless the benefit has not been passed on to growers in the name of food-security,” he added.

Exporters have alerted the government to the negative impact on exports if concessional energy tariff was stopped. They demanded for provisions of concessional power tariff with additional budgetary allocations.

“The unviable cost of manufacturing, exports will suffer and the Prime Minister and his economic team shall be solely responsible for export decline and further depletion in forex reserves,” PHMA said.

The concessional energy tariffs should be sustained on an annual basis to help the textile exporters meet their commercial commitments made six months in advance to global buyers.

At least on yearly basis as the textile export sector to make commitments for six months in advance and as such

Any abrupt mid-year change or increase in power rates may leave the entire export sector jeopardized, it warned.

“The Commerce Ministry efforts must not go futile with any uncalled-for intervention from any other ministry. Inter-ministerial harmony and cohesion must go on to support the national economic charter and export enhancement,” the PHMA said.

Copyright Business Recorder, 2022