Electricity at concessionary rate: Ministry of commerce, textile not taken on board

Ministry of Commerce and Textile was not taken on board by the Power Division in revoking the government's decision of providing electricity at concessionary rate of US cents 7.5/kwh to the five zero-rated exports-oriented sectors.

This was revealed by a senior official of the ministry while talking to Business Recorder after attending the sub-committee meeting of the National Assembly Standing Committee on Commerce. The committee met with Mohammad Yaqoob Sheikh in the chair "to consider the issue of concessions given to the textile sector and their sudden withdrawal by various government departments."

The committee members said that industry is going on strike from February 10 against the Power Division's decision of revoking the concessionary rate for electricity and it is feared that many people would be rendered jobless, besides the closure of industry in the country. Shaza Fatima Khawaja, member of the committee termed the Power Division notification of revoking the concessionary rate illegal while saying that the facility was given by the ECC but it was revoked by Power Division without the ECC approval.

The parliamentary panel repeatedly asked the Joint Secretary Power Division (Admin) for thought-processing behind the revoking of concessionary electricity to the export sectors. However, the official failed to satisfy the committee while saying that concerned official (joint secretary Power Finance) is not present. The committee sought explanation from the official concerned for not attending the meeting.

The committee was informed that the government provided electricity at concessionary rate of US cent 7.5 /KwH to the five zero-rated sectors. The ECC of the cabinet considered the summary on October 24, 2018 and the tariff rationalization for power sector was approved. The Power Division issued separate notification for zero-rated industrial consumers vide SRO No. 2019, January 2019, at a rate of Cents 7.5/KwH.

The Finance Division instructed the Power Division to seek clarification from competent authority whether or not taxes and surcharges are exempted from recovery. It is submitted that as the summary has been moved by the Power Division; therefore, the decision and relevant details would be available with the Power Division, said officials of Commerce and Textile Ministry.

The textile sector is of the view that (i) US Cent 7.5/kwh was given to provide regionally competitive electricity rates; (ii) the SRO 12(1)2019 interprets US Cent 7.5/kwh is an all inclusive tariff; (iii) US Cent 7.6/kwh if loaded with fuel price adjustment, quarterly surcharge financial surcharge and Neelum-Jhelum surcharge then the price of electricity would increase by following - base price US Cents 7.5/kwh (Rs 11.65), quarterly surcharge 3rd & 4th quarterly 2018-19 (Rs 0.63), quarterly surcharge 1st quarter (Rs 0.26), annual tariff distribution margin (Rs 0.20), financial surcharge (Rs 0.43), fuel adjustment (Rs 1.57), and Neelum-Jhelum (Rs 0.01). The textile sector is of the view that they should be charged with US Cents 7.5/kwh i.e. Rs 11.65/kwh and additional Rs 3.19 should not be charged.

The Power Division clarified vide letter date January 13, 2020 that the matter was considered by the federal government and it was decided and clarified that the concessionary rate of 7.5/kwh for zero-rated industrial consumers notified through SRO 12(1(2019) was only limited to the extent of schedule of tariff notified through SRO No. 1-10 dated January 1st, 2019 and SRO (1)2010 dated January 1, 2010. The industry filed petition in courts and decision was in favor of Power Division.

MNA Shaista Pervaiz said all taxes were included in the tariff but now the Power Division is saying that the taxes were not included. The five zero-rated sectors are going on protest against these measures from February 10. She further said that the government's decision will make electricity and gas more expensive for textile sector especially in Punjab and millions of people will be rendered jobless.

Shiza Fatima Khawaja said that this decision of the government will shut down people's small factories. "Our production costs are already higher compared to other regional countries," she added. "What are the details of any study done by the concerned ministries before withdrawing the concessionary tariff?" said Shiza Fatima Khawaj, adding how an industry can pay three and a half rupees pr unit of electricity for a year.

Convener of the committee also said how Power Division can refuse the approved rate of ECC. The Power Division official said that they are trying to reduce the cost of electricity production and more attention is being given to increasing power generation through alternative sources.