LAHORE (Web Desk)- Hamid Zaman, the chairman of the All Pakistan Textile Mills Association (APTMA) North Zone, has expressed concern about widespread closures and layoffs of textile workers due to the Regionally Competitive Energy Tariff (RCET), which sets petrol prices for the export sector at $9/MMbtu and electricity at 9 cents/kWh.
On Monday, he spoke during a post-budget news conference held at the association’s Zonal headquarters. APTMA Vice Chairman Asad Shafi, Secretary General Raza Baqir, Senior Vice Chairman Kamran Arshad, and other senior association members were also present.
“To sustain competitiveness across the nation and globally, a fair playing field should be guaranteed in the supply of petrol,” Zaman said. “Electricity should be provided to the textile sector at the real cost of service (excluding cross-subsidy).
According to NEPRA, the real cost of power for B3, B4 users is Rs 23/kWh (8.2/kWh), according to Hamid Zaman. After adding cross subsidies, capacity payments to IPPs, line losses, power thefts, financial and other costs, this cost—which includes CPP, EPP, T&D, and service charges—is increased to over Rs 40/kWh. He said, “Passing on the cost of such inefficiencies and bad management to the export industry with 100% recovery of bills and zero losses would be unjust and unfair.”
He said that charging an electricity price of 16 cents per kWh after taking into account cross subsidies is the highest in the region, noting that the rates in India, Bangladesh, and Vietnam are 8 cents, 10 cents, and 6 cents per kWh, respectively.
He said that the RCET is not a subsidy. Due to the fact that cross subsidies cannot be exported, it is decided after excluding them.
The APTMA chairman claimed that a recent study by the Pakistan Institute of Development Economics (PIDE) had forewarned of deindustrialization in Punjab and that the removal of the Regionally Competitive Energy Tariff (RCET) would have disastrous effects on job losses, investment declines, the share of exports, profit margin contractions, and overall industrial output. According to the study’s findings, the industry’s increased power rate is really a cross-subsidy from the industry to other sectors, with no basis in terms of law, economics, or technology.
In the absence of government assistance, the sector has generated $16 billion in exports during the current fiscal year compared to a goal of $25 billion, according to Chairman North Zone. In the most recent fiscal year, textile exports increased to $19.3 billion thanks to the government’s encouragement of their expansion.
He claims that the continuation of the RCET would enable exports to soar to $50 billion in the following five years as the textile industry has planned to set up 1000 garment plants in the SME sector for an investment of $ 7 billion, resulting in annual exports of $ 20 billion and creating jobs for well over 700,000.
He said that the country’s balance of payments situation will continue to worsen because leaving RCET would result in a $10 billion annual loss in exports. He said that it would also cause disruptions in the industry’s investment strategy for establishing 1000 garment factories in order to generate millions of new employment.
The APTMA chairman demanded a cost-based tariff for the export industry, arguing that for the next fiscal year, the RCET for electricity at $9/kWh and gas at $9/MMBTU should be reinstated for industries focused on exports.
He said that the Rs. 1074 billion in energy subsidies set up for RCET in the next fiscal year is sufficient. Additionally, he has pushed for the implementation of WACOG, which was enacted in February 2022, to ensure that petrol prices are similar throughout the nation for the export business.
He said that 30% of the textile sector in Punjab has already shut down completely, with the number of partial closures rising daily. Exports would decrease by $10 billion annually as a consequence of closure.In the textile industry alone, 700,000 workers have already lost their jobs, and millions more are anticipated to follow, he continued.