Page 18 - April-May 2021

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Pakistan to continue the

regionally competitive

energy tariffs for the textiles

Pakistan’s uncompetitive and inefficient energy mix current increase in exports demonstrates the
has rendered economic growth elusive and raised competitiveness of Pakistan’s exports; when inputs
pertinent affordability questions. The regionally are provided at regionally competitive prices, exports
competitive energy tariffs provided in 2018 to support were achieved despite an unfavorable international
the textile sector, Pakistan’s largest manufacturing environment.
and exporting sector, reaped benefits instantly and
led to impressive expansion and growth, both within Keeping in view the overall aspects of exports, a relief
the industry and for Pakistan’s economy as a whole. package worth Rs. 26 billion has been approved for the
textile sector of Pakistan. The news has been highly
Despite unreliable energy supply and higher tariffs, appreciated by the textile industries all over the country.
the textile sector has been operating at full capacity The Cabinet Committee on Energy (CCOE) approved
and receiving increased orders, leading to the revival this package by extending the tariff scheme. The
of non-operational units and creating new jobs. package was initially approved in November 2020
Textiles have been heavily supporting the economy, and was set to expire on April 30, 2021.
yet illogical energy tariff hikes and policies hamper
the industry’s profitability. In the past, the textile The Government had initially introduced the gas
sector commended the Prime Minister for making supply scheme at a discounted rate for the
Pakistan’s energy tariffs competitive with those in export-oriented industry. But later, the Petroleum
Bangladesh and India. Still, the current rate is 9 Division said that all sectors, including those not
cents/Kwh, which is well above the average of 7 exporting textile products, were availing the subsidy.
cents in the region. The Petroleum Division also proposed that only the
export-oriented industry should benefit from the
According to APTMA, the country will witness an support on gas supply. Interestingly, the textile
increase in the textile exports by up to $16.5 billion in industry was not only availing the subsidy on gas
June 2021 and $20 billion in June 2022 if the supply but also receiving electricity at discounted
Government assures the continuation of Regionally rates. It is believed that such a huge relief could be
Competitive Energy Tariffs of $6.5 per MMBtu of beneficial for the textile industries, and they could
Gas/RLNG and 7.5 cents per unit of electricity. The perform well to meet their targets regarding exports.

April/May 2021