High power tariff: Exporters threaten to go on strike if government fails to honour commitment

The members of value-added knitwear industry have threatened to go on strike if government's commitment of providing electricity to the export sector at regionally competitive rate of 7.5 cents/KWh is not fulfilled by Monday, next week.

The executive body and the majority members of the Pakistan Hosiery Manufacturers and Exporters Association (PHMA) in a meeting held Thursday at PHMA regional office with its vice chairman Shafiq Butt in the chair, have assured their leadership that the whole export industry is ready to come to streets for mass protests if the surcharges and extra levies are not taken back immediately.

Some members also urged their leadership to consider other options of road blockade or closure of mills to pursue the government for fulfillment of its commitment, as high power tariff would hit Pakistan's exports and discourage investment.

Addressing the meeting, PHMA vice chairman Shafiq Butt said the body in its next meeting likely to be held on Tuesday, Feb 18, will decide the next strategy.

Expressing grave concern over the imposition of surcharges, taxes and fuel adjustment charges on power supply to the export-oriented sectors by the Power Division, he said if the extra charges were not withdrawn, they would threaten Pakistan's exports, spark a crisis in the textile industry, which is fulfilling its commitment of enhancing exports.

He stated that in January 2019, the government had announced an all-inclusive tariff of 7.5 cents per kilowatt-hour for the zero-rated export sectors to reduce the production cost in a bid to secure competitive edge in the international market. He said that the ECC decision also clarified that all elements like financial cost surcharge, Neelum-Jhelum surcharge, taxes, fixed charges, quarterly tariff adjustment and fuel price adjustment would not be charged to the zero-rated sectors. This had resulted in substantial quantitative increase in exports but the Ministry of Energy, in violation of the ECC decision, has now instructed power distribution companies (Discos) to charge add-ons and surcharges raising the aggregate cost to 13 cents per unit.

How Pakistan industry would be able to export at electricity price of 13 cents/KWh against rate of 7-9 cents/KWh in India and Bangladesh and 7.5 cents/KWh in China, he queried and argued as to how exporters would pay the difference of tariff.

Shafiq Butt demanded the government to fulfill its commitment of regionally competitive energy of 7.5 cents/KWh all-inclusive and withdraw the decision of imposition of surcharges, taxes and fuel adjustment on power supply to export-oriented sectors as it would reverse the growth in exports.