CCOE extends tariff scheme for textile sector

Approval will provide relief of Rs26 billion to industry

Zafar Bhutta April 16, 2021


The textile industry is set to milk more money following the Cabinet Committee on Energy’s (CCOE) approval of another package worth Rs26 billion for the industry by extending the Time of Use (ToU) tariff scheme.

On a summary of the Power Division, the CCOE approved the proposal of “Extension of Time of Use (TOU) Tariff Scheme for Industrial Consumers” from May 1, 2021 to June 30, 2022.

The package was originally approved in November 2020 and was set to expire on April 30, 2021.

Sources told The Express Tribune that the government would bear a burden of Rs26 billion due to extension of the tariff scheme for industrial consumers.

Read: Textile exporters urge govt to break cotton cartel

The Power Division had sought approval of the energy committee for allocation of a budget subsidy of Rs26 billion for industrial consumers from May 1, 2021 to June 30, 2022 due to extension in the tariff scheme.

The industry is receiving gas supply at discounted rates. The textile industry is a major beneficiary of the subsidy scheme.

The government had initially introduced the gas supply scheme at discounted rate for the export-oriented industry. But later, the Petroleum Division said that all industries, including those which were not exporting textile products, were availing the subsidy.

The Petroleum Division also proposed that only the export-oriented industry should avail the subsidy on gas supply. Interestingly, the textile industry was not only availing the subsidy on gas supply but it was also receiving electricity at discounted rates.

Moreover, the textile sector was receiving gas for its captive power plants. The government had approved a plan for conducting audit of captive power plants. But some textile industrialists obtained a stay order from court as they were not ready for the audit of inefficient captive power plants.

The textile industry is also yet to pay cotton cess for conducting research on cotton crop. It has obtained stay orders and is not ready to pay the cess.

Earlier, the government had prepared a policy under which only those millers that paid the cess would be eligible for subsidy schemes. But under the current government, the textile ministry has withdrawn this condition for big textile millers.

The CCOE meeting was chaired by Federal Minister for Planning, Development and Special Initiatives Asad Umar on Thursday.

Read more: Textile sector plans protest against cabinet decision

The committee also took up another summary of the Power Division wherein it was proposed that the National Electric Power Regulatory Authority (Nepra) may be directed to withdraw the generation tariff and licences awarded to category-III renewable energy projects as their determinations were not consistent with the approved policies.

The CCOE referred the matter to the Law Division for legal opinion.

The Maritime Affairs Division presented a report on the progress on establishing two new LNG terminals at Port Qasim, Karachi.

The meeting was informed that the sub-committee, headed by the Ministry of Maritime Affairs, was holding regular meetings to facilitate the setting up of new terminals.

Published in The Express Tribune, April 16th, 2021.

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