The federal government has decided to substitute the electricity and RLNG tariffs for the textile and clothing industry, indicated for fiscal year 2021-2022, with regionally competitive energy tariffs, told Business. Record well-informed sources.
The Commerce Ministry informed the Cabinet’s Economic Coordination Committee (ECC) last week that an October 11, 2021 summary regarding the 2020-25 textile and clothing policy has been submitted to the ECC.
According to sources, a committee was formed by the ECC, which held several meetings and recommended few changes that were incorporated into the policy.
As a result, the committee’s report and tabular comparison of the specific changes incorporated in the draft policy were presented to the forum in accordance with the CEC decision, and the salient elements of the policy were shared with the committee.
The ECC was informed that the ECC Technical Advisory Sub-Committee, headed by the Prime Minister’s Advisor for Finance and Revenue, Shaukat Tarin, deliberated on the revised policy at its meeting held on December 16, 2021. .
The draft policy was submitted by the Ministry of Commerce on December 13, 2021 for approval by the ECC with the modifications suggested by the Energy Division.
The ECC briefly discussed the revised Textiles and Clothing Policy 2020-25, as it had already been approved by the Technical Advisory Sub-Committee and approved it with the following changes: (i) Tariffs electricity and RLNG, indicated for the 2021-2022 fiscal year, will be replaced by competitive energy prices at regional level; (ii) regionally competitive RLNG tariffs will be applicable to the processing industry; (iii) for captive units and cogeneration units, a separate policy will be formulated by the Ministry of Energy, in consultation with the Ministry of Commerce, which will cover the benefits and; (iv) Comments from the Finance Division will form part of the proposed Textile and Clothing Policy 2020-25.
Meanwhile, the prime minister’s office also sought comments from the electricity division and petroleum division on the suspension of gas supply to the export sector in Punjab.
All Pakistan Textile Mill Association (APTMA), in its letter to Prime Minister Imran Khan, said the Energy Ministry had assured the Punjab’s export sector of continued gas supplies on condition that they agree to increase the price to $ 9 per MMBTU from $ 6.5. The APTMA gave its agreement in the presence of Abdul Razak Dawood.
Subsequently, the Ministry of Petroleum presented a gas management plan to the CCoE on December 2, 2021, which stipulated that the gas intended for captive power plants (CPP), cogenerated or not, would be shed from December 15.
According to APTMA, the Punjab-based industry was hit by a double whammy, namely an increase in the price of gas to $ 9 double that of Sindh & KP, and a load shedding from December 15, 2021 .
The APTMA, in its letter, claimed that under these circumstances, some member factories took legal action on December 8, 2021 against the CCoE’s decision for the provision of six full days and were suspended on the grounds of discrimination against the Punjab by compared to other provinces.
“The discrimination is not only in the price but also in the offloading of gas which is limited to the Punjab only despite the fact that 70% of the textile industry is based in the Punjab, and the suspension of the gas will bring 80% of the ‘industry to a full term. shutdown that will have an extremely negative impact on exports and put an end to the extremely positive increase in exports and investment seen over the past year, ”said Executive Director Shahid Sattar, executive director of APTMA in his letter to the Prime Minister.
The Association further argued that if the export industry was not able to deliver the goods in accordance with the commitment made with the buyers, the orders, once lost, would be a permanent loss for Pakistan and extremely difficult, if not impossible, to reverse.
The bulk of the factories in the Punjab are cogeneration plants and use gas to generate electricity as well as steam and hot water used in the manufacturing process.
Even if the additional electrical load could be taken care of, factories cannot produce steam and hot water from electricity. However, the truth is that nightclubs are by no means able to provide additional power to factories.
The Prime Minister was informed that since most factories (80 percent) will not be able to operate, the impact on employment would be extremely damaging.
As a result, a large number of workers would be made redundant in the Punjab, with many social and political consequences.
APTMA has called on the prime minister to intervene to suspend the decision to suspend gas supplies to the Punjab. He also asked the Prime Minister for time to advocate the cause of the Punjab industry.
According to sources, a ministerial committee comprising the adviser on finance and income, the minister of energy, Hammad Azhar, the minister of industry and production, Khusro Bakhtiar and the adviser on trade and investment , Abdul Razak Dawood, held a meeting back-to-back for two days this week on the problem of gas supply to the textile sector.
The sources argued that after hard-hitting arguments were presented among the committee members on this issue, it was decided to donate 30 MMCFD RLNG to the most efficient textile factories in Punjab only for processing.
This article originally appeared in Business Recorder on December 26, 2021.