Govt withdraws discounted tariff

Effective from October 1, 2022, the government has decided to discontinue the concessional tariff given to consumers of exportoriented sectors.

According to an official memorandum issued by the ministry of energy, the concessional tariff scheme to consumers of the export-oriented sector will be discontinued with effect from October 1, 2022.

Consumers of export-oriented sectors will then be billed in accordance with the applicable Industrial Tariff as notified by the government of Pakistan for the month of October 2022.

While issuing directions, the ministry of energy quoted decisions of the Economic Coordination Committee (ECC) which have been ratified by the Cabinet.

The ministry of energy said that following the decision of the ECC and Cabinet, the consumers of export-oriented sectors were granted a concessional tariff of 9 cents/kwh in August 2022 for the first quarter (till September 2022).

Pursuant to the given directions, DISCOs have provided Rs15.16 billion subsidy to the said consumers during the month of August 2022 against the budgetary allocation of Rs20 billion for FY 2022-23.

The ministry of energy also projected that Rs12.053 billion would be required as subsidy for the current month to grant a concessional tariff to the consumers of export-oriented sectors.

The ministry also informed that Rs26.287 billion were already outstanding against the subsidy provided to the export-oriented sectors during the FY 2021-22.

“In view of this, ministry of commerce is requested to arrange and provide additional funds amounting to Rs33.499 billion (Rs26.287 billion of pending claims of FY 2021-22 and Rs7.212 billion for month of September 2022),” stated the ministry of energy.

Read FBR finds it hard to defend 10% super tax in courts

Export oriented sectors including the textile industry have been facing criticism from different quarters over getting subsidised gas and electricity at the same time.

The textile sector had captive power plants meant for producing electricity in case they did not secure power from the national grid.

These textile units had been receiving electricity and gas at discounted rates at the same time. The previous government linked the provision of gas to the textile units with the performance audit of the captive power plants.

The textile industry, however, obtained stay orders from the court to stop the government from conducting an audit of the captive power plants.

There had been a misuse of the gas subsidy provided to the captive power plants as those textile units were also receiving subsidised gas.

The petroleum division also conducted a study explaining that while sales from textile mills had increased locally, there had not been a substantial increase in textile exports.

During the previous government’s tenure, the finance ministry had also pointed out that textile exports increased due to rupee devaluation and not because of an increase in quantity.