Exporters demand removal of surcharges on power supply

Term it anti-export move that will threaten exports, discourage investment

Imran Rana January 25, 2020
Term it anti-export move that will threaten exports, discourage investment. PHOTO: REUTERS

FAISALABAD: The Pakistan Textile Exporters Association (PTEA) has expressed grave concern over the imposition of surcharges, taxes and fuel adjustment charges on power supply to the export-oriented sectors by the Power Division.

Terming it an anti-export move, PTEA Chairman Sohail Pasha said if the levies were not take back immediately, they would threaten Pakistan's exports and discourage investment in capacity and capability.

"This unwarranted action will spark a crisis in the textile industry, which is delivering on its commitment to enhance exports," he warned in a statement on Friday.

In January 2019, the government announced an all-inclusive tariff of 7.5 cents per kilowatt-hour (kWh) for the zero-rated export-focused sectors to reduce the production cost of export goods in a bid to secure competitive edge in the international market.

Quoting Economic Coordination Committee's (ECC) decision, Pasha said it was agreed that the financial cost surcharge, Neelum-Jhelum surcharge, taxes, fixed charges, quarterly tariff adjustment and fuel price adjustment would not be collected from the zero-rated sectors.

"This resulted in a substantial increase in export volumes, however, barely a year later, the Ministry of Energy instructed the power distribution companies to charge add-ons and surcharges, raising the aggregate electricity cost to 13 cents per unit," he regretted.

"How does the government expect exports, subjected to the tariff of 13 cents, to compete with those from India and Bangladesh, where the tariff is 7-9 cents per kWh, as well as China with tariff of 7.5-10 cents."

He asked how the exporters would pay the difference in tariffs, which were imposed retrospectively, when it was not factored in the cost of export goods already sent abroad.

He demanded that the government meet its commitment of the regionally competitive energy tariff of 7.5 cents and withdraw the surcharges, taxes and fuel adjustment cost imposed on the export-oriented sectors.

PTEA Patron-in-Chief Khurram Mukhtar said with a view to increasing investment and broadening the industrial base, the State Bank of Pakistan had enhanced financing limits for the exporters under the subsidised loan schemes, however, the decision had not been implemented yet.

"Financing limits for exporters under the Export Finance Scheme (EFS) and Long Term Financing Facility (LTFF) have been touched and banks are reluctant to give more financing," he said. "This has created immense problems for textile exporters because in the absence of finance, they are unable to expand their export turnover."



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