The textile industry has asked the government to allocate a separate power tariff category for the export industry by excluding cross-subsidies, stranded costs, and inflated system losses for achieving an export target of $50 billion in the next 4 years.
All Pakistan Textile Mills Association (APTMA) came up with the demand in a letter written to the secretary of the Commerce Ministry Muhammad Sualeh Ahmad Faruqqui.
The letter mentioned that Finance Minister Senator Ishaq Dar had shown commitment in support of the proposal of the separate tariff category for the exporters pitched by the textile industry in a meeting held on July 10, 2023.
The proposal, which has also been annexed with the letter written to the secretary of Commerce, is based on 2Es—electricity and exports arguing that the higher the energy cost lower will be the exports as 30-40pc of conversion costs in the textile sector are energy.
APTMA argued that cross-subsidy, stranded costs, inefficiencies, and excess transmission and distribution losses couldn’t be exported, and the components in the energy tariff rendered exports uncompetitive.
“The solution is that special power tariff category for exporters should be extended to the export sector, which judiciously excludes cross-subsidies and stranded costs, while accurately incorporating actual T&D losses for B-3 and B-4 categories,” the letter read.
According to APTMA, the cost of the cross-subsidies, stranded costs, and excess T&D Loss will have to be spread over other consumer categories. And if the costs are spread to consumers other than lifeline consumers/domestic, it will cause an increase in the tariff by Rs3.7/kWh which could be recovered by efficiency gains in the distribution margins of the DISCOs.
The present amount of receivables ending 2022-23 is in the vicinity of Rs2.5 trillion and even a small thrust in recovery can yield 10 percent of the amount as extra collection during the current fiscal and which can add Rs250 billion to the kitty.
APTMA demands separate power tariff category to increase exports
