An increase in power tariff through quarterly adjustments has frittered away the initiatives of the government meant for the export sector.

These comments came from All Pakistan Textile Mills Association (APTMA) in a letter to the Prime Minister Adviser on Commerce, Industries and Production and Investment, Abdul Razak Dawood.

The copies of the letter have also been sent to the Secretary to Prime Minister, Azam Khan, Secretary Commerce and Textile, Chairman Task Force on Textile, Ahsan Bashir and DG, RDA Cell, Ministry of Textile, Kanwar Usman.

According to the textile sector, realizing that the power tariffs for industry in Pakistan are well above the regionally prevailing competitive tariffs the government notified a tariff of 7.5 cents/kWh in January 2019. Since July 2019, Discos are charging a quarterly adjustment in addition to 7.5 cents/kWh.

"We now understand that it is proposed to charge FPA in addition to these as well which essentially means that the exporter will not be aware of his energy cost and will therefore have to export on a presumptive cost basis which naturally will be higher to cater for unforeseen costs," said Shahid Sattar Executive Director APTMA in his letter.

Textile sector maintains that setting tariff in cents was done so that the increase in tariff occurs automatically whenever there is devaluation of the rupee and to provide a stable internationally competitive rate. In this particular case, the per unit additional rate of the zero rated industry has increased by Rs 1.2 from Rs 11.38 per unit.

"We can't understand the logic of charging another Rs 4-5 per unit on top of this which will defeat the purpose of a dollar based competitive tariff," Sattar added.

APTMA claims that the exporting sector, charged Rs 15 to Rs 16/kWh, would also be subject to continuous change. Power Division is marketing additional power to all and sundry at a fixed price of Rs 11.7/Kwh. The bulk of this use would be competitive rather than being productive. This is inexplicable as the critical need of Pakistan's economy and future is expanding exports for a sustainable balance of payments.

Further, 7.4 cents tariff was specially approved by the ECC and the Cabinet. It is surprising that a decision of the government was altered without first getting approval of the ECC and the Cabinet and is now being regularized retrospectively which will lead to unnecessary litigation.

Textile sector further contended that Pakistan's exports, which have shown remarkable progress of 30 percent in volume terms and are set to contribute an addition $ 2 billion to the country's export, will lose their competitive edge.

"The situation now is that industry is not sure of its costing as energy forms a significant proportion (35 percent) of the conversion cost. Under these uncertain conditions the government instead of facilitating and providing a regionally competitive energy tariff and ease of doing business is actually doing exactly the opposite. The Prime Minister and government's initiatives to facilitate exports are being frittered away," Sattar continued.

Textile industry has requested the Adviser to Prime Minister to ensure the continuation of power tariff at 7.5 cents/kWh inclusive of all charges.