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ISLAMABAD: Ministry of Commerce (MoC) has sought supplementary grant of Rs 32 billion to Power Division for supply of electricity at 9 Cents per unit to five export-oriented sectors during the current fiscal year, sources close to Secretary Commerce told Business Recorder.

Commerce Ministry has prepared this emergent proposal after Power Division threatened to withdraw subsidy beyond May 31, 2022.

Sharing the background, the sources said, Economic Coordination Committee (ECC) of the Cabinet on August 16, 2021 considered a summary titled “continuation of concessional rates of electricity and RLNG to export oriented sectors” submitted by Ministry of Commerce and approved the availability of energy at regionally competitive prices required specially in COVID-19 scenario to sustain the exports.

The ECC also approved electricity may be provided at US cents 9 per kWh all-inclusive to export oriented sectors namely textiles including jute, leather, carpet, surgical and sports goods during Financial Year 2021-22. Finance Division was directed to give financial commitment that additional funds if required by Power Division and Petroleum Division shall be provided to continue concessional energy rates to export-oriented sectors.

The ECC also directed that Ministry of Energy may apprise relevant ministries regarding the budgetary situation in time so that Commerce Division may place a summary for supplementary grant allocation before ECC of the Cabinet for consideration.

PM’s electricity relief package: Govt’s nod sought to discontinue Rs5 subsidy

The sources said, Finance Division has allocated Rs. 26 billion for continuation of supply of electricity to five export-oriented sectors at US cents 9 per kWh under Federal Budget FY 2021-22. However, Ministry of Energy (Power Division), in its O.M of May 13, 2022 apprised Commerce Division that Rs. 24.948 billion has already been disbursed to five export-oriented sectors till February 2022 against the budgetary allocation, whereas K-Electric’s claims amounting to Rs. 4.61 billion are under verification process. Further, Power Division conveyed that, owing to increase in industrial tariff and number of export-oriented industrial consumers, its subsidy cell has received Rs. 7.26 billion claims for March 2022, which are under verification process.

As per Power Division, the incremental subsidy trend depicts that the allocated subsidy amount would not be sufficient for remaining period of CFY 2021-22 and therefore requested Ministry of Commerce for obtaining a supplementary grant amounting to Rs. 32 billion for continuation of concessional electricity tariff to five export-oriented sectors till the end of CFY 2021-22.

According to sources, approximately 65 percent of total exports are from five export-oriented sectors. Further, such measures including others provided a launching pad to export-oriented sectors and resultantly overall exports attained historical high level of S 26.3 billion during July to April 2021-22 with an increase of approximately 26% as compared to corresponding period of FY 2020-21.

Foregoing in view and pursuant to the ECC of the Cabinet’s decision, Commerce Ministry has proposed that supplementary grant of Rs. 32 billion may be allocated for Power Division during current FY 2021-22 to continue supply of electricity to five export oriented sectors namely textiles including jute, leather, carpet, surgical and sports goods at US cents 9 per kWh all-inclusive till 30h June 2022.

Copyright Business Recorder, 2022

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