RECORDER REPORT

LAHORE: All Pakistan Textile Mills Association and Pakistan Ready Made Garments Manufacturers and Exporters Association Wednesday rejected the frequent increase in the prices of gas and electricity, as the move, they say, continues to make Pakistan’s products uncompetitive in the international market.

In a statement issued here All Pakistan Textile Mills Association (APTMA) members have expressed concerns over the increase in power tariff to 9 cent from 7.5 cent per kWh, saying that this increase in power tariff would play havoc with the Small and Medium Enterprises (SME) sector in the textile value chain. 

Participants of a meeting of APTMA said the inflated tariff of 9 cent per kWh is 20 per cent higher than the earlier tariff of 7.5 cent per kWh. 

They said the year 2020 has already been challenging one both for the government and the industry due to global pandemic of Covid-19 which plunged global economy to the worst recession. This pandemic was fraught with risks of loss of massive export orders in the wake of closure of the markets. The industry was expecting continuity of 7.5 cent per kWh power tariff to ensure a complete turnaround and contribute to the economic uplift of the country. 

They further said the average power tariff in the region is not more than 7 cent per kWh and the present increase in power tariff would make the textile value chain uncompetitive in the region. Pakistan’s cost of power production is 26% higher for the industrial sector compared to other regional countries like Vietnam, Sri Lanka, Malaysia, Bangladesh, South Korea, Thailand and India, and it is 28% costlier for residential areas than the regional countries. 

It is worth noting that the majority of the SMEs in the textile value chain are without gas connections, which means they would have to face an alarming disparity against their regional competitors. The importance of a level-playing field can be estimated from the fact that 70-80 per cent employment is in the SME sector and their growth results in the largest employment generation. 

The APTMA members have stressed the point that this increase in power tariff would badly affect the growth of the SME sector, which is an important link of the textile value chain. 

They have appealed to Prime Minister Imran Khan and Federal Minister for Power Omar Ayub to take stock of the situation and instruct DISCOs to withdraw electricity bills immediately in the larger interest of the country's exports, employment and investment. 

Meanwhile, the newly elected zonal chairman of PRGMEA Adeeb Iqbal in a statement said that that amid worsening export volumes and low industrial growth, the hike in electricity rates to 9 US cents per kWh for the export sector is really surprising and if it is not withdrawn, it would prove to be dangerous for country’s garment industry. He also stressed the need for early approval of new Textile Policy 2020-25, as it would be beneficial for the major export sectors. He said that PM Imran Khan has already accorded approval to this policy in terms of policy directives on production and diversification of exports. He added that the approval of textile policy is the only way to ensure more investment in this sector as a huge investment is in the pipeline but is awaiting the last accord of textile policy.

Adeeb Iqbal said that growth of value-added textile sector is must to steer the industry of worse situation and contribute to the exports of the country. He observed that the garment industry should be allowed to grow while enjoying the right to avail opportunities against the competitors. 

He observed that country has not been able to achieve its maximum export potential and product diversification owing to limited access to raw materials. He pointed out that the procedures for temporary import schemes should be simplified so that exporters could be able to achieve price competitiveness and product diversification.

Pakistan’s exports have been struggling for a long time and to counter that he called for continuation and consistency in long-term policies.

Opposing the government recent decision of raising power tariff for the export sector by 1.5 cents amidst downfall of exports, he sought regionally competitive energy tariffs for export industries to capture the global market.

“The export-oriented industry has now been forced to pay a cost of Rs15 per unit, which is more than the double of the electricity rates in India. This will pull the exporters out of the international market by the regional competitors who are able to avail better prices for energy.”

He said that the electricity charges in Bangladesh and India are about 7-9 cents per kWh while in China, which is Pakistan’s major trading partner, the electricity charges are less than 9 cents per kWh. As a result, Pakistan has been losing the international markets to China, India and even Bangladesh. Although the oil prices were linked with the international prices, the benefit of decline in oil prices had not been passed on to the consumers for quite a long time, he added.

“PRGMEA appreciates the government be provide power to the export-oriented sectors for two months at 7.5 US cents but after that power being supplied at 9 US cents per kWh for the rest of the financial year 2020-21 at a time when the export volumes continue to suppress,” he said.

He said that in Jan 2019 the government had announced an all-inclusive tariff of 7.5 US cents per unit for five major export sectors to enhance Pakistan’s export competitiveness but the decision was not implemented in its full spirit.