PBF demanded competitive tariff rates for power looms to become functionalBreaking

September 07, 2022

Pakistan Businesses Forum (PBF) Central Punjab, Vice Chairman Waheed Khaliq Raamay said almost 50 to 75 processing mills closed and almost 10 printing mills are closed in faisalabad region. Similarly fifty thousand looms mills closed due to high price of electricity. Talking to media on Wednesday, he said mostly factories received bills at Rs 55 per unit which is unbearable. Almost 300 to 350 embroidery machines were closed till date. Waheed further said Pakistan’s electricity and gas tariffs for the Textile industry remain the highest in the region—rendering firms uncompetitive—despite the RCET tariffs being in play. The general industrial tariff remains at 0.15USD/KWh, twice that in Vietnam and 1.5 times higher than Bangladesh and India. Likewise, Pakistan’s textile industry faces the highest gas/LNG tariff in the region. Pakistan’s textile industry is paying 9 USD/MMBtu, which is 3.5 times more than Uzbekistan, and 1.5 times Bangladesh’s industrial tariff.

Pakistan’s textile industry must price its power inputs at a tariff lower than the regional average tariff of 0.072USD/KWh, to stay regionally competitive. The current RCET for electricity (from the national grid) is higher than the regional average. RCET is an imperative across the whole value chain, not just for the value-added/exporting elements—if upstream such as spinning firms cannot produce yarn at a competitive rate, processing firms would lose their market competitiveness even with lower energy tariffs. We must understand the entire textiles industry value chain, and not just the direct exporting parts, are equally dependent on RCET, being interdependent and more so as the up-stream value chain has a higher energy demand.

PBF official has urged the government to continue with its various subsidies to support its plans to invest up to $7 billion for generating over 700,000 jobs and fetching $20 billion in exports, with a target to achieve $50 billion in exports by 2026. The textile industry has already committed to establishing 1,000 garment plants. And each plant will consist of 500 stitching machines at an investment of $7 million and will be able to produce garments for exports of $20 million per annum, while generating employment for 700 workers. It would therefore be prudent to restore the SRO 1125 ie, zero rating for the entire textile value chain to meet the working capital requirements. This policy measure in combination with the continuation of RCET would be essential in enabling the textile sector to continue on its journey to achieving.

Credit: Independent News Pakistan-INP