Zero-rated industrial consumers: Auto sector opposed to provision of power at ‘special’ rates

ISLAMABAD: The country’s auto sector has opposed the government’s plan to provide electricity at special rates to zero-rated industrial consumers by creating a ‘distinct category’ particularly for the textile sector.

Informed sources told BR that creating such a ‘distinct category’ is unlikely shortly if the staff-level agreement on the second review of the ongoing Standby Arrangement, which is critical to the viability of the economy, is to be successful. In a letter to caretaker Prime Minister Anwar ul Haq Kakar, copies of which have also been sent to the caretaker Finance Minister, caretaker Minister for Power and Petroleum, Chairman NEPRA and Deputy Chairman Planning Commission, the Pakistan Association of Automotive Parts and Accessories Manufactures (PAAPAM) Chairman wrote: “We believe, implementing such a proposal may adversely affect the import substitution industry and exacerbate existing challenges such as high inflation, a shrinking economy, smuggling of the auto parts industry, etc.”

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The PAAPAM further noted that “Despite facing challenges such as the Free Trade Agreement (FTA) with China, duty evasion, smuggling, and under-invoicing in global trade, import substitution industries have demonstrated resilience in their performance. However, these challenges have contributed to a decline in competitiveness. The prospect of increasing tariffs and having import substitution industries cross-subsidize export sector industries is not a viable solution.”

Copyright Business Recorder, 2023