Lahore: The Pakistan Hosiery Manufacturers and Exporters Association (PHMA) has welcomed the cut in power tariff for small and medium enterprises (SMEs) and omitting peak-hour charges to encourage manufacturing, saying the three-year relief package will boost the exports besides enhancing the competitiveness of the local industry.
PHMA zonal chairman Faisal Mehboob Sheikh and chief coordinator Adil Butt, observed that the Industrial Energy Package announced by the PM would boost productivity, lower costs and generate employment. It will be an added impetus to our industrial sector that is driving the economic revival and posting robust growth.
“Elimination of peak hours from electricity tariff of all industries, 50% discount on consumption of additional units for B1, B2 B3 connections till June 2021 and 25% discount on additional consumptions for all industrial connections for 3 years is really is great relief for the industry and we are very happy with this decision,” PHMA zonal chief said.
He said that electricity rates are high in Pakistan and it is for the first time that power rates are being reduced. Pakistan’s exports have become expensive as compared to the regional and other competitors. The discounted power rates would provide a breather to the export sectors and indicate that the economy has now been moving towards the positive trend, he added.
Previously, the industry was being charged the electricity tariffs on peak rates between 7pm to 11pm now if any industry has B1, B2 and B3 connections, it would get 50 percent discount on additional units by June.
Faisal Mehboob Sheikh said that for enhancing the production, it was important to reduce the power price and finish the peak hours.
PHMA chief coordinator Adil Butt added that the power relief package would help in expanding employment opportunities besides boosting economic activity in the country.
“The move is good but it will not have a very significant impact, as the government has announced discounts on additional electricity use. The industry will get benefit of this relief package of consuming additional electricity when it expands which definitely takes time,” he said. He urged the government to reduce the tariff for existing use of electricity, which would really benefit the exports.
Adil Butt said that it needs to be understood that this relief is only for additional electricity use i.e. electricity consumed in excess of last year’s average, he said. “So the overall decision is positive, which would result in increased exports and more employment opportunities but the real relief is that govt introduce cut in existing power tariff.”
He called for further ease-of-doing-business, decrease in cost of production, solution to liquidity crunch through early refunds payment, long term and consistent energy tariff policy and relaxed import policy for industrial raw materials, so that industrialization could be boosted and exports could be enhanced.
Adil Butt said the apparel sector was performing well through an increase in exports and should be encouraged through making it truly zero-rated for its whole value chain. He was of the view that the core issue in Pakistan was high cost of doing business, which had rendered its industrial production uncompetitive. According to him, the liquidity crunch is a major stumbling block in the way of improving exports.
He said the decision will benefit small and medium industries, which are the backbone of the economy. He said the electricity in the country is expensive because of previous contracts signed for power generation, which has adverse effects on the economy.