LAHORE: The All Pakistan Textile Mills Association (Aptma) has warned that an increase in electricity tariff could result in suspension of 30% production capacity, which the sector has managed to bring back into operation in the past one year due to subsidised energy rates.
It could cause direct and indirect unemployment, leaving nearly 0.5 million people jobless, whom the textile sector had managed to bring back to work under the promise of increasing the country’s exports.
“We fear that in the next three months at least 100 mills can shut down,” said Aptma Chairman Punjab Chapter Adil Bashir at a press conference on Tuesday.
These mills could not sustain the new electricity rates since their only source of energy was electricity, he said.
Bashir pointed out that a letter had been issued to different power distribution companies in January 2020 by the Ministry of Energy, in which they were told to add different surcharges of Rs6-6.5 to the subsidised rate.
Earlier, the government had set electricity tariff at 7.5 cents, inclusive of all taxes, for the major export-oriented industries in January 2019.
Bashir added that the ministry issued an additional letter the same day in which the distribution companies were asked to collect the same surcharges on the previous one-year bills.
“According to the government, it had forgotten to allocate the subsidy in the budget, so the price difference should be collected from the millers.”
With the additional surcharges, Bashir said, the energy tariff would go up to 13 cents from 7.5 cents, which would render the industry uncompetitive in the global export market since energy tariffs for their regional competitors ranged between seven and nine cents per unit.
“It is an illegal move, which we believe is due to power-sector inefficiencies and capacity payment issues of different power plants; why should we pay them for the wrongdoing of their own departments and previous governments,” he asked.
He stressed that in recent times the textile sector was looking for expansion and setting up new industrial units due to increase in textile exports, which had now been stopped due to unforeseeable policies of the government.
Published in The Express Tribune, January 29th, 2020.