Industrialists urge govt to lower power tariff, interest

Industrialists are urging the government to reduce the power tariff to 9 cents per kilowatt-hour (kWh) and the markup to 15% to stimulate export growth. Without these changes, they warn, 60%-70% of the industry could shut down.

They argue that uncompetitive energy tariffs are hindering export growth and investment in the export sector, while regional countries like India and Bangladesh are offering incentives and lower energy tariffs to their investors and exporters. They described the federal budget for 2024-2025 as favouring the elite, leaving more than 225 chambers and trade bodies across the country distraught.

The industrialists stressed that the current unbearable energy prices will lead to the shutdown of 60%-70% of the industry, as gas tariffs have skyrocketed. Prominent industrialists Salahuddin Qureshi, Muhammad Farooq Shaikhani, and Adeel Siddiqui stressed the need for initiatives to support the local industry, which has significant potential and can generate jobs for millions of workers. They warned that if local business leaders remain frustrated and relocate their businesses abroad, millions of workers will become unemployed, leading to increased poverty and crime. They called for a long-term policy, at least 15 years, to allow industries to grow.

The Patron-in-Chief of the United Business Group (UBG), SM Tanveer, urged Finance Minister Muhammad Aurangzeb to decrease the power tariff to 9 cents/kWh and the markup to 15% to foster growth in the national economy through exports, investment, and employment. “These two steps would stimulate the industry with positive vibes. The business community can generate taxes only if it is allowed to earn,” he said in a statement on Tuesday.

He questioned the justification for exorbitant interest rates at 20.5% when inflation has already dropped to 12% in the country. Providing the industry with electricity at a rate of 9 cents/kWh, he argued, would result in a $6 billion increase in exports, an additional demand of over 300 megawatts on the grid, revenue of Rs500 billion, and a reduction of Rs240 billion in debt servicing. He suggested that the Rs240 billion be diverted from PSDP to support this cause. Tanveer highlighted that the industry has been paying Rs240 billion in cross-subsidies and over Rs150 billion in stranded costs. He questioned why international buyers would prefer Pakistan over countries like Vietnam and Bangladesh, which offer cheaper energy rates. He said the export industry is declining, and Pakistan is losing market share rapidly because electricity costs are more than twice as high as those in competing countries.