ISLAMABAD: Power Division has directed Distribution Companies (Discos) and K-Electric (KE) to provide electricity @ Cents 9/kWh all-inclusive to the five sectors (erstwhile zero rated) for only September 2022.
In a letter to Chief Executive Officers (CEOs) of all the Discos and K-Electric, Power Division has cited the reference of ECC decision of July 25, 2022 and subsequently ratified by the Cabinet on July 27, 2022, clarified by Ministry of Commerce (Textile Wing) on August 16, 2022 and further clarified by Cabinet Division on August 19, 2022 that consumers of export-oriented sectors were granted concessional tariff @ Cents 9/ kWh.
Power Division which made a case before the ECC that it cannot extend any concessional tariff to five zero rated sectors after consumption of allocated subsidy of Rs 20 billion for the current fiscal year, has intimated to Discos and KE that they will be informed for continuation of the concessional tariff scheme on monthly basis.
According to sources, out of Rs 20 billion allocated subsidy for the entire fiscal year, actual claim for the month of August 2022 was Rs 15.160 billion which implies that the remaining budget for the current fiscal year is Rs 4.840 billion whereas projected cost for September is Rs 12.053 billion. The sources said the current scenario has been shared with the Ministry of Commerce (Textile Wing) for provision of sufficient funds for continuation of concessional package for five zero rated sectors. In response, Commerce Division has requested to extend the package till first quarter of FY 2022-23 as per Cabinet’s decision, whereas on fund availability, Commerce Division committed to take the matter with Finance Division.
According to sources, Power Division is likely to submit a summary to the ECC or Cabinet and will share updated position with respect to availability of funds for concessional tariff being extended by five zero rated sectors. A couple of weeks ago, Commerce Minister Syed Naveed Qamar wrote a letter to the Finance Minister seeking reasons of withdrawal of concessional electricity for five zero-rated sectors for the last three quarters of current fiscal year, implementation on affectivity date of RLNG rates and ban on registration of new units under concessionary regime.
In the letter to Finance Minister, the Commerce Minister appreciated the former for his support on continuation of regionally competitive tariff to five export-oriented sectors (namely textiles including jute, leather, carpet, surgical and sports goods) that has helped Pakistan’s industry to achieve historic high exports of goods, i.e., $31.79 billion during FY 2021-22 despite the fallout of Covid-19 pandemic and severe economic challenges.
Recalling the decision, the ECC took on July 25, 2022, the Commerce Minister said that the ECC of the Cabinet considered a summary submitted by Ministry of Commerce regarding “regionally competitive energy rates for export oriented sectors during FY 2022-23 (effective July 1, 2022)” and subsequently the Federal Cabinet ratified the ECC’s decision on July 27, 2022.
In pursuance of decisions of the ECC and the Cabinet, the Power Division on August 12, 2022 directed Discos/ K-Electric “to provide electricity @ US cents 9 per kWh all-inclusive to five export oriented industries (erstwhile zero-rated Industries, i.e., textiles, leather, carpet, surgical and sports goods) from August 2022 with the direction that the Discos (including K-Electric) will be informed for continuation of the concessional tariff scheme on monthly basis.”
On August 12, 2022, the Petroleum Division directed SNGPL and SSGCL that “RLNG would be provided at US $ 9 per mmbtu all-inclusive to five export-oriented sectors across Pakistan for all existing connections remaining with the allocation of a total subsidy of Rs. 40 billion as already made by Finance Division in the budget. The rates will be effective from August 1, 2022.”
Subsequently, the Cabinet Division on August 19, 2022 issued a corrigendum in pursuance of Prime Minister’s approval on the summary submitted directly by Finance Division and revised decision of the Cabinet meeting held on August 27, 2022 and deleted the following para: (a) the rate of US cents 9 per kWh for the export-oriented sectors will also be applicable till the end of FY 2022-23 as in case of RLNG. According to Commerce Minister during the ECC and the Cabinet’s meetings, it was decided that: (i) RLNG will be provided @ US$ 9 per mmbtu all-inclusive from July 1, 2022.The decision of August 1, 2022 was only specific to the electricity which is recorded in the minutes, as well.
However, Petroleum Division implemented the decision from August 1, 2022 that is contrary to the discussion held in the ECC and the Cabinet; (ii) the rate of US cents 9 per kWh for the export-oriented sectors will also be applicable till the end of FY 2022-23 as in case of RLNG. However, implementation of the decisions by Power and Petroleum Division does not cover applicability of regionally competitive tariffs is till 30th June 2023; and (iii) RLNG will be provided @ US $ 9 per mmbtu all-inclusive to five export-oriented sectors/ industries across Pakistan for all existing connections as of the decision’s date. However, the Petroleum Division has stopped registration process of existing export-oriented sectors with the argument that only those five export-oriented sectors will be allowed to avail concessionary tariff that were already registered in accordance with Circular No. 4 of the FBR.