Opposition: Sindh textile exporters slam govt for U-turn on gas tariff

ECC reversed its decision on reducing gas prices for industrial sector

KARACHI: Sindh textile exporters criticised the federal government on withdrawing one-third reduction in gas prices for industries, saying that the haphazard decision of the Economic Coordination Committee (ECC) has hurt the government's credibility.

They also slammed the Sindh government for opposing the earlier decision of the ECC in which it reduced gas prices.

“Is it some kind of joke?” Pakistan Apparel Forum Chairman Jawed Bilwani questioned while talking to The Express Tribune. “The decision has badly hit the credibility of the top economic decision making body.



“The decision negates the impression in the country that the ECC takes decisions on solid homework. When you take such random decisions, it shows that you do not have any homework behind your assessments,” said Bilwani, a Karachi-based apparel exporter who represents different associations of value-added textile sector.

The ECC of the Cabinet on Thursday revised its earlier decision of reduction in gas sale price for industrial sector.

“It will hurt export-oriented industries in Sindh and Khyber-Pakhtunkhwa,” said. Fawad Anwar, Managing Director of Al Karam Textile Mills - one of the country's leading composite units.

The government is not taking the problems of exporters seriously and this will further hit Pakistan's exports. About three months ago, the government and the private sector agreed on a package for manufacturing sector, but it has not been announced yet by the government, added Anwar.

On November 26, the ECC reduced the gas prices for the influential industrial sector from Rs702 per million British thermal units (mmbtu) including GST to Rs500 - a reduction of 28.8%.

The benefit for the five-export oriented industries had been higher than this, as exports are exempted from paying 17% sales tax. The reduction for the export-oriented industries was 33.3%, as their gas prices came down from Rs600 per mmbtu to Rs400 per mmbtu.

The space for reducing prices up to 33.3% was created after the government decided to pass on the benefits of lower input prices to the industries instead of giving them to provinces as Gas Development Surcharge (GDS).

However, immediately after the ECC's decision, Sindh government objected to it, forcing the federal government to withhold the notification of the ECC decision, according to sources in the Ministry of Finance. They said that Sindh Chief Minister Syed Murad Ali Shah wrote a letter to Prime Minister Nawaz Sharif and protested against the decision.

The GDS is an important source of non-tax revenue for the provinces. In fiscal year 2015-16, ended on June 30, the federal government gave Rs33 billion to the federating units in GDS. During the first three months of this fiscal year, the Centre transferred Rs9.9 billion on account of GDS.

The industrialists in Punjab also protested against the decision of reduction in gas prices, as their gas prices are determined after including the cost of Liquefied Natural Gas, which is an imported and expensive fuel. After the 33% cut in in the industrial gas tariff, the price for Sindh industries had come down to Rs400 mmbtu excluding GST whereas Punjab industries were paying over Rs1,000 per mmbtu for Re-gasified Liquid Natural Gas (RLNG).

Published in The Express Tribune, December 17^th, 2016.

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