Textile millers seek tariff reduction

Say without power price rationalisation economy will deteriorate further

LAHORE:

The All Pakistan Textile Mills Association (Aptma) has expressed deep concern over what it says is an unnecessarily high power tariff for the industrial sector in general and export-focused industries in particular and has underlined the dire need for tariff rationalisation to stave off further economic deterioration.

Speaking at a press conference on Thursday, Aptma North Zone Chairman Kamran Arshad pushed the government to come up with proposals for rationalisation of electricity tariffs for goods export to help save millions of jobs and arrest the plunge in shipments to overseas markets.

According to a recent report, he mentioned, power generation in Pakistan stood at its lowest in the past 33 months. He added that power production in the country dropped from 14,151 gigawatt hours (GWh) in July 2022 to merely 7,547 GWh in November 2023.

The high official of the association of textile millers revealed that industrial power consumption in the first 20 days of December came down 26% year-on-year while domestic consumption decreased 8%.

Overall, “around 50% of the industrial consumption of electricity has declined because of a 116% increase in tariff.”

Arshad said the dramatic decline stemmed primarily from the skyrocketing electricity costs as tariffs for export industries had been more than doubled.

Power consumption has dipped 49% in areas covered by Lahore Electric Supply Company, 36% in the jurisdiction of Multan Electric Power Company and 40% in Gujranwala Electric Power Company region in October 2023 against the corresponding period of previous year.

The textile mills association voiced concerns that the low electricity consumption in industrial units would cause huge losses to the already unsustainable and debt-ridden power sector.

To make up for the losses, it warned, the power sector would come up with demand for an even higher quarterly tariff adjustment for the second quarter of FY23, which would take tariffs to new highs.

“An alarming surge in power tariff will cripple the industry, triggering economic deterioration, a drastic reduction in industrial activity and loss of millions of jobs,” the Aptma chairman feared.

Read Power generation hits 33-month low

He was of the view that the best way for meeting foreign exchange requirements of the country was the increase in exports by making them regionally competitive on the back of rationalised energy tariffs.

Industrial units are shutting down and even independent organisations, like the Pakistan Institute of Development Economics, have cautioned that high energy prices are sparking a premature deindustrialisation process across the country, especially in Punjab.

He called on the government that there was still time to carefully review its policies and avert the catastrophe. “Tariffs must be reassessed and revised to economically optimal levels, which will help increase power consumption and the power sector’s revenue.”

Speaking on the occasion, Aptma Senior Vice Chairman Asad Shafi emphasised that a rational tariff for industrial consumers would stimulate industrial activities, jack up consumption and provide a sustainable revenue stream for the power sector.

“It will create incentives to move away from gas-based captive power generation, free up natural resources and bring down energy imports.”

Shafi believes that the growth in industrial activity, especially in export units, would revive millions of jobs and potentially add millions more, generate income and allow people to come out of the “lifeline and protected categories”.

He asked the government to carefully review its power tariff policies to ward off the threat of industrial disaster.

He also proposed that the government should make the energy price affordable to enable the industry to generate revenue for bearing capacity charges being paid for the installed power generation capacity in the country.

Published in The Express Tribune, December 22^nd, 2023.

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