Incremental power consumption: ZRI ‘categories’ may be allowed to benefit from plan: APTMA urges PD

ISLAMABAD: All Pakistan Textile Mills Association (APTMA) has requested Power Division (PD) to allow Zero Rated Industry (ZRI) to benefit from incremental consumption package which is effective till October 2023.

In a letter to Secretary Power Division, Rashid Mahmood Langrial, APTMA referred to the letter of National Electric Power Regulatory Authority (Nepra) of March 10, 2023, to communicate the decision of the Authority regarding endorsement of Federal Government’s decisions taken for the discontinuation of Regional Competitive Energy Tariff (RCET) of Rs. 19.99/kwh for export-oriented sectors and Kissan Package (relief of Rs. 3.60/kwh) from March 1, 2023.

The letter says, Authority has endorsed Federal Government’s decision to discontinue RCET rates for export sector, requesting that in light of decision related to ZRI consumer categories be allowed to benefit from incremental consumption package available till October 2023.

As per the Federal Cabinet decision of August 24, 2021, the incremental consumption package was discontinued from FY 22 for ZRI consumer categories which were duly reflected in Authority’s decisions of January 11, 2022, and May 11, 2022, with regard to the extension of incremental consumption package till October 2023.

“We understand that the decisions of the Authority and Federal Cabinet were based on the premise that ZRI consumer categories were benefiting under RCET rates and were accordingly not allowed the benefits of Incremental consumption package,” APTMA said, adding that since the RCET rate has been discontinued from March 1, 2023, the ZRI consumer categories may be allowed to benefit from Incremental consumption package.

Meanwhile, APTMA in a letter to Prime Minister stated that textile exports for February 2023 clocked in at $ 1.2 billion while the sector could easily generate $ 1.7 billion per month in line with exports achieved last year. Additional capacity has also been installed or is under installation through an investment of $ 5 billion (TERF/ LTTF) but is not yet operational due to forex issues and the availability of energy. The decline in textile exports has been progressively accelerating.

According to APTMA, the progressive decline in exports is a consequence of the moratorium on import of raw materials and essential spare parts, lack of adequate supply of energy at competitive prices and failure of sales tax refunds, all have contributed significantly to the closure of over 50 per cent of industry.

The textile sector maintains that given the trajectory of decline, Pakistan is likely to fall short by $ 3 billion in textile exports from the exports achieved last year of $ 19.4 billion without taking account of any increase from newly installed capacity.

On an annual basis, the loss of support for the Balance of Payments (BoP) will be well over $ 6 billion per annum, further deepening and exacerbating the unsustainable economic situation.

APTMA requested Prime Minister to clear all imports of export-oriented sectors/ ZRI which have arrived at ports whether against L/Cs, cash against the document, adding that export-oriented sector be allowed to open L/Cs without hindrance for raw material machinery, spare parts and other items to restore the industry’s supply line. All banks must be informed accordingly.

Commenting on supply of energy, APTMA requested the Prime Minister to create a level playing field within the country by implementing a uniform gas price of $ 7 per MMBTU based on an industrial WACOG for the export industry across the country.

The Association further requested to maintain Rs 19.99/ kWh at the actual cost of service (excluding cross-subsidy) for the export sector throughout the country to maintain competitiveness across the country and internationally. It also requested that first priority for gas supply be accorded to captive power plants of the export-oriented sectors.

APTMA’s Patron-in-Chief, Ijaz Gohar, in his letter also requested Prime Minister to restore SRO 1125 zero rating for the textile sector value chain while collecting sales tax on domestic sales at the point of sale. He demanded immediate refund of all sales tax and other dues.

Copyright Business Recorder, 2023