Cut in energy costs: SMEs, industrial sectors welcome govt’s decision

ISLAMABAD: The Small and Medium Enterprises (SMEs), industrial sectors and the business community, while welcoming the government’s decision to reduce energy costs for the industrial sector, have said that the decision will help revive industrial growth, reduce input costs, and boost exports, which will help in checking inflation.

Representatives of the SMEs, business community and the Chamber of Commerce and Industry, while talking to Business Recorder on Prime Minister (PM) Imran Khan’s energy relief package for the industrial sector, said that the government must continue incentives for the industrial sector. They called for further ease-of-doing-business, decrease in cost of production, solution to liquidity crunch through early refunds payment, long-term and consistent energy tariff policy, and relaxed import policy for industrial raw materials, so that industrialisation could be boosted, and exports could be enhanced.

Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Chairman Ijaz Khokhar welcomed the prime minister’s announcement of reducing electricity prices, but said that its success would be dependant on consistency. “Government should lock the reduced electricity prices at least for three years to achieve the desired results of increasing exports and creating job opportunities,” said Khokhar, adding that it was a positive step but costing should be locked for at least three years.

Shaban Khalid, former president Islamabad Chamber of Commerce and Industry (ICCI) told Business Recorder that the reduction in electricity prices would reduce the input cost and would make Pakistani products competitive in the regional markets. The government decision will also help in boosting the country’s exports and create jobs opportunities. Khalid further said that with the reduced input cost, products prices were expected to decrease, and would ultimately help in easing the ongoing inflation in the country.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) also hailed the prime minister’s decision to reduce the electricity tariff for the SMEs and industries. Mian Anjum Nisar, president FPCCI said the reduced electricity cost would positively impact the local markets and would create a tendency to overcome inflation and lead to the spur of economic growth. Electricity relief packages will ultimately provide support in decreasing expenses and industries will be able to compete with their regional contemporaries. Nisar urged the industrial sectors to avail full benefits of this facility and play their part to increase production and volume of export. This is high time to put all energy and effort into the enhancement of the socio-economic development of the country.

PM Imran Khan on Tuesday had announced reduced energy costs for the industrial sector. The prime minister had said that from November 1, the additional electricity used by the SMEs up to June 30, 2021, would be sold at 50 percent lower the cost. The prime minister also said that even the large industries, would pay reduced electricity costs at all times, without any concept of off-peak hours. The prime minister admitted that the industry was severely impacted during the lockdown period, and it was now essential that the industrial sector should be supported to perform well.

The Pakistan Hosiery Manufacturers and Exporters Association (PHMA) also welcomed the cut in power tariff for the SMEs and omitting peak-hour charges to encourage manufacturing. The PHMA said that the decision of PM Imran Khan, the three-year relief package would boost the exports and enhance competitiveness of the local industry.

The PHMA Zonal Chairman, Faisal Mehboob Sheikh, observed that the energy relief package for the industrial sector would boost productivity, lower costs and generate employment. It will be an added impetus to our industrial sector that is driving the economic revival and posting robust growth. Sheikh said that electricity rates were high in Pakistan and it was for the first time that power rates were being reduced. Pakistan’s exports have become expensive as compared to the regional and other competitors. The discounted power rates would provide a breather to the export sectors, and indicate that the economy has now been moving towards the positive trend, he added.

Secretary General Pakistan Tanner Association Mohammad Ali also welcomed the decision, saying the power relief package would help in expanding employment opportunities besides boosting economic activity in the country. He urged the government to reduce the tariff for existing use of electricity, which would really benefit the exports. Ali said that it needed to be understood that this relief was only for additional electricity use i.e. electricity consumed in excess of last year’s average. So the overall decision is positive, which would result in increased exports and more employment opportunities.

The ICCI, while welcoming the announcement of an energy relief package by the current government for the SMEs and industries, and termed it a “highly positive development” as it would bring down the production cost, make our industry competitive and help in enhancing the country’s exports.

However, the Chamber said that the government should have provided this relief on all units of electricity consumed by the SMEs and industries to enable them in achieving accelerated growth, which would help turn around the economy.

Sardar Yasir Ilyas Khan, president, ICCI said that power tariffs in Pakistan were considered the highest in the region due to which the cost of doing business had gone up significantly, and our SMEs were facing great difficulties in producing goods at competitive prices, thus exports were suffering. He hoped that providing 50 percent relief in commercial electricity price to the SMEs on additional usage from November this year to June next year, and 25 percent relief to all industries on additional usage of electricity for three years would be instrumental in reducing production cost and boosting industrialisation in the country leading to increase in exports. He said that abolishing peak hour regime was a laudable step of the government to support the industry. Yasir Ilyas said that the government should reduce high taxes on power tariffs and also consider providing similar relief to industry in gas tariffs for the next three years that would make our industry very competitive and help boost exports. He said that the government should fix power tariffs for the next five years at one level, which would give more confidence to the investors, and help businesses make long-term plans for growth and expansion.

Copyright Business Recorder, 2020