Increase in electricity tariff could burden approximately 168bn PKR in 2021: PRGMEA Chairman

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Lahore – The Pakistan Readymade Garments Manufacturers and Exporters Association on Tuesday demanded the govt to prioritize value-added apparel industry in energy supply at competitive rates on the patron of Bangladesh, as the government has increased the average power tariff by over 40 percent during the last three years followed by the proposed hike in gas rates by withdrawing subsidy for export industry.

PRGMEA regional chairman Sheikh Luqman Amin observed that the PRGMEA fully opposes this irrational move of the government to withdraw subsidy on supply of gas to the export industry under tariff rationalization plan. He pointed out that the government had announced to increase electricity base tariff by Rs 1.39 per unit across the country from November, while it had already enhanced the base power tariff by Rs 1.95 per unit in January 2021 along with quarterly and monthly electricity price hike under fuel adjustment formulas, totaling the power price hike to over Rs5 per unit. He said that the NEPRA has allowed an increase of Rs1.65 per unit in power tariff, under quarterly adjustments, which will empower the distribution companies to collect Rs173 billion from consumers in the next one year. The decision would put another burden of Rs168 billion on the consumers during current fiscal year. The revision would increase the average base power tariff, excluding various taxes, surcharges and duties etc, from Rs13.97 per unit at present to Rs15.36 per unit in total.

Sheikh Luqman said the increase in power and fuel prices will increase the cost of production for the industrial section which in turn will impact the ease of doing business and exports. He said the capacity payments to inefficient power plants, extension of agreements with 1994 power policies, inefficient transmission system are all imprudent costs, which can’t be passed on to consumer.

He requested the government to keep focus on apparel industry which can generate foreign exchange, contribute to local taxes and generate employment, he added. He said that govt in a meeting with the stakeholders had decided that gas supply will be supplied to the processing units as priority number one at the competitive prices but the decision does not seem to be implemented now.

He said the value-added textile industry is facing problems because of the increasing cost of production due to gas shortages, higher electricity tariff, and long delay in the new textile and apparel policy approval.

PRGMEA regional chairman urged the government to provide a level-playing field to the apparel industry by providing it smooth gas and power supply, besides relaxing duties on import of industry raw material.