Five zero-rated sectors’ concessional tariff issue to be resolved soon: MoC

ISLAMABAD: Ministry of Commerce (MoC) said on Monday that the issue of electricity supply to five zero rated sectors at Cents 9/kHw will be resolved within a couple of days as some “pockets” for funds have been identified to the Finance Ministry.

This was revealed by Dr Ahmed Mujtaba Memon, Special Secretary Ministry of Commerce, during a meeting of Senate Standing Committee on Commerce, presided over by Senator Zeshan Khanzada.

Official sources told Business Recorder that Discos have provided Rs 15.160 billion subsidy to the consumers of export-oriented sectors during the month of August 2022 against budgetary allocation of Rs 20 billion for CFY 2022-23. Further, it was also projected that Rs 12.053 billion would be required as subsidy for the current month for granting concessional tariff to the consumers of export-oriented sectors, adding that Rs 27.287 billon were already outstanding against the subsidy provided to the export-oriented sectors during FY 2021-22.

Power Division, sources said, has requested Commerce Ministry to arrange and provide additional funds amounting to Rs 33.499 billion (Rs 26.287 billion of pending claims of FY 2021-22 + Rs 7.212 billion for the month of September 2022).

Five sectors to get power for 9 Cents/kWh for Sept only

Power Division further requested Commerce Ministry to intimate to consumers of export-oriented sectors for discontinuation of the concessional tariff scheme from October 1, 2022. Afterwards, the consumers of export-oriented sectors will be billed in accordance with applicable industrial tariff as notified by the GoP for the month of October 2022.

Responding to a question during Senate Standing Committee meeting, Special Secretary Commerce confirmed the facility of concessional tariff for five zero rated sectors has been withdrawn. However, the issue will be sorted out in a day or two as Commerce Ministry has proposed some sources to Finance Ministry for subsidy. He contended that exports will grow when concessions are given to the export-oriented industry. An alternative view was that textile industry gets gas at cheap rates for Captive Power Plants (CPPs) and sells electricity to the consumers.

“Commerce Ministry is very much concerned as exporters are facing multiple issues with respect to exports,” said Special Secretary Commerce.

He argued that if the United States and Europe are in recession, key markets of Pakistan, Pakistani exporters who are in comfort zone so far, will be subjected to a hit in their exports.

He further maintained that the government has promised five zero rated sectors that electricity and gas will be provided to them at regionally competitive rates. However, Power Division has conveyed that since funds allocated in the budget to provide electricity at concessional rates to five sectors have already been consumed therefore electricity supply at Cents 9/ kWh is being suspended from October 1, 2022.

“The issue of electricity supply at concessional rates for five zero rated sectors will be resolved in a couple of days. If these sectors are provided electricity at Rs 43/ kWh instead of Rs 26/kWh, they will not be able to compete with regional players,” he further stated.

According to Special Secretary Commerce, five zero rated sectors were also charged higher gas rates in July due to some misconception. Commerce Ministry has requested the Prime Minister office to resolve this issue too.

The meeting was informed that Pakistan is likely to allow import of 5.5 million bales of cotton duty free due to damage to its local cotton crop.

During discussion, Senator Abdul Qadir said that Chinese ambassador at a recent function showed interest in import of meat from Pakistan.

Commerce Ministry officials apprised the Committee that China intends to import donkeys from Pakistan.

However, Senator Danesh Kumar said that China wants to import donkeys and dog meat from Pakistan which may not be possible.

He further revealed that fishermen from Balochistan are smuggling (illegally selling) fish to international modern trawlers 12 nautical miles in the sea. He proposed that there should be some mechanism to regularize sale of fish to trawlers beyond 12 nautical miles (international waters). There are reports that Sindhi trawlers are also involved in illegal fishing in Balochistan territory.

Senator Shaukat Tarin proposed that incentives be given to free lancers of IT sector with the condition that they should remit their $ 4-5 billion to Pakistan.

Copyright Business Recorder, 2022