Tanvir A Sheikh, President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly reacted on the decision to increase the power tariff by 31 percent. President FPCCI said that the increase in electricity charges would ultimately escalate the cost of production of the industrial sector.
This decision will have bad impact on the overall economy in general and textile and cement sectors in particular, as electricity accounts for a substantial cost of these sectors. The profit margin of these industries is not more than 3-6 percent. If the price of electricity increases by 31 percent, they have to increase the prices of their outputs, as a result of this the products will no longer be able to compete in the International market.
He said that this decision of increasing electricity tariff has been taken on the recommendation of World Bank, which does not want the developing countries to grow. He also pointed out that industrial sector especially the large scale manufacturing sector consumes more than 40 percent of the total electricity in Pakistan. With the increase in tariff it will be hurt the most. The increase in energy prices will ultimately increase the Consumer Price Index (CPI) consequently the inflation will further rise in the country which can result into massive public unrest.
Tanvir A. Sheikh has also shown concern on amendment in the policy for zero rated Industries. It is notable that in the Federal Budget 2008-09, zero rated industries were exempted from 10 percent withholding tax on electricity bills. Now government has amended its stance and indicated that only manufacturers-cum-exporter having minimum 80 percent export will be exempted from withholding tax on electricity bills.-PR
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