LAHORE: All Pakistan Textile Mills Association (APTMA) has expressed deep concern over the unnecessarily high power tariff for the industrial sector general and export-oriented in particular and emphasised the dire need for power tariff rationalisation to prevent further economic deterioration.
Chairman APTMA North Kamran Arshad addressing a press conference here Thursday urged the government to ensure rationalised power tariff for the export-oriented industry to save millions of jobs and arrest plunge of exports.
Senior Vice Chairman Asad Shafi, Executive Ch. Mohammad Ali and Secretary General APTMA Mohammad Raza Baqir were also present.
Kamran Arshad extended gratitude from APTMA to the Federal Minister for Energy Muhammad Ali who has taken cognisance of the high power tariffs and their negative fallouts, and has taken up the task to restructure power tariffs that have prompted a country-wide wave of deindustrialization. He urged upon him to expedite the reform process considering the gravity of the situation.
APTMA informed that as per a recent report from JS Global, power generation in Pakistan is at the lowest in the last 33-months.
Chairman APTMA said that power generation in the country has declined from 14151 GWH in July 2022 to merely 7547 GWH in November 2023. He said the industrial power consumption for the first 20 days of December has declined by 26% year-on-year while the domestic consumption has reduced by 8%. Overall, some 50 percent of the industrial consumption of electricity has declined due to 116% increase in power tariff.
He said this dramatic decline is primarily due to skyrocketing power tariff, as the power tariff for export industry has more than doubled. Power consumption has declined by 49% in LESCO, 36% IN MEPCO and 40% in GEPCO region by October 2023 against the corresponding period.
Chairman APTMA apprehended that decline in power consumption by industry will cause huge losses to an already unsustainable and debt-ridden power sector.
To make up for these losses, he added, the power sector is going to come up with an even higher Quarterly Tariff Adjustment for Q2 FY23 in January that will further increase high power tariffs.
Alarming upsurge in power tariff will cripple the industry leading to economic deterioration, drastic reduction in industrial activity and loss of millions of jobs, he feared.
He suggested that the best way to meet foreign exchange requirement is to enhance exports by making them regionally competitive through rationalised energy tariff.
According to him, the industry is shutting down and even independent organisations like the Pakistan Institute for Development Economics have said that high price of energy is causing full-scale premature deindustrialisation across the country and especially in Punjab.
He said there is still time for the government to carefully review its policies and reverse the incoming catastrophe. Power tariffs must be reassessed and revised to an economically optimal level that increases power consumption and power sector revenue.
Speaking on the occasion, Asad Shafi said that a rational tariff for industrial consumers will stimulate industrial activities, increase consumption and allow for sustainable power sector revenue. It will also create incentives to move away from gas-based captive generation, further freeing up natural resources and bringing down the energy import bill.
He said growth in the industrial activity, especially in export sectors, will also revive millions of jobs and potentially add millions more, create income and allow people to come out of lifeline and protected categories.
Asad Shafi added that the government must carefully review power tariff policies to reverse the incoming catastrophe. Power tariffs must be reassessed and revised to an economically optimal level that increases power consumption and power sector revenue.
He also advocated for affordable UoSC of US c 1-1.5/KWh to export-oriented industry for carrying out B2B transactions. Cross sector subsidy and stranded cost be waived off from wheeling charges, he continued.
He further proposed the government to make the energy price affordable for the industry to enable it to generate revenue for payment of capacity charges against the installed power capacity in the country.
Copyright Business Recorder, 2023
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