Closed industrial units: Minister advocates payment of power bills in instalments

ISLAMABAD: Caretaker Minister for Commerce and Industry, Gohar Ijaz has approached caretaker Minister for Energy, Muhammad Ali for payment of bills of thousands of closed unit in instalments, as there are one million unemployed across the country due to the closure of industrial units.

The proposal from the caretaker minister has been floated at a time when the caretaker government has already started strict action against electricity thieves and defaulters.

Secretary Power, Rashid Mahmood Langrial, on Thursday claimed that Discos have recovered Rs 6 billion out of which Rs 5 billion was recovered in the last seven days, and 1500 have been arrested across the country. He further stated that there will be no respite till this sub-culture of theft is reversed. Good citizens cannot be allowed to be punished for the sins of the delinquents.

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Well-informed sources told Business Recorder, Rashid Langrial is continuously updating General Headquarters (GHQ) on recovery and action against defaulters, adding that GHQ has assured full support in the ongoing drive of Discos.

A letter to Minster for Energy, Minister for Commerce and Industry stated that a number of industrial units across Pakistan are closed due to non-payment of electricity bills.

The caretaker Minister, during his recent visit to Lahore, Karachi, Peshawar and other cities of Pakistan, observed that a number of industries have shut down due to outstanding electricity bills and this closure of industries has caused about one million unemployed across the country.

The country’s textile group exports declined by around 9.49 percent during the first two months (July-August) of the current fiscal year 2023-24 and stood at $2.766 billion compared to $3.056 billion during the same period of 2022-23.

Ijaz has proposed that a policy may be devised on urgent basis that could provide relief to the closed units so that they may be allowed to pay their outstanding bills in 10 equal instalments with 10% down payment.

The rest of the nine instalments may be ensured by obtaining post-dated cheques to be payable on monthly basis. However, such industrial units would pay their current electricity bills regularly.

Commerce Ministry, sources said, is also working on a plan to enhance exports, which includes supply of electricity to textile sector without cross subsidy.

Aptma, which was represented by Gohar Ijaz at one time, argues that discontinuation of the Zero-rated Industry (ZRI) package for export-oriented sectors will result in an increase in the cost of electricity for these industries. This increase in electricity costs will directly affect the textile industry, which is one of Pakistan’s largest export-oriented sectors.

The textile industry is a significant contributor to Pakistan’s economy, accounting for approximately 60% of the country’s total exports.

The industry is highly dependent on energy, and the increase in electricity cost will have a significant impact on its production and profitability. The ZRI package provided electricity to export-oriented sectors at a discounted rate of Rs 19.99/kWh (all-inclusive).

With the discontinuation of the ZRI package, the textile industry is now paying the standard tariff rate, which is significantly higher and which has increased its electricity costs which, in turn, has raised its operating costs, resulting in reduced profits or even losses.

Moreover, Pakistan’s textile industry faces stiff competition from countries such as China, India, and Bangladesh. The increase in electricity costs will make Pakistani textiles less competitive in the global market, reducing demand and further impacting on the industry’s profitability.

Aptma has hired consultancy services of Bridge Factor (Private) Limited, a financial, transaction and project advisory firm advising clients in areas of corporate finance and business strategy.

Expanding from its niche in power and renewable energy sector, Bridge Factor offers comprehensive solutions to its enlarging portfolio within the manufacturing, aviation, oil and gas, telecom, banking and financial services sectors. Aptma looks forward to resolving this issue with the help of Bridge Factor.

“Overall seven million workers have lost their jobs in all sectors of industry. Almost all small units have closed down whereas big units are now operating on two shifts instead of three shifts,” said one of the stakeholders.

Copyright Business Recorder, 2023