The Economic Coordination Committee (ECC) of the Cabinet is expected to approve the new Textile and Apparel Policy (2020-25) on Wednesday (tomorrow).
This policy will allow the textile and apparel sectors to claim subsidies on electricity through the proposed rebate mechanism of the Power Division.
Official sources told ProPakistani that the Ministry of Commerce moved a summary to the ECC titled, ‘Textile and Apparel Policy (2020-25)’. On the summary of the Commerce Ministry to the ECC, Power Division has sought amendments in the Policy for changing mechanism for providing subsidy on electricity to the textile and other industries.
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According to the summary of the Power Division to the ECC, electricity to the textile sector should be provided at the applicable notified rates (from the date of commencement of Textile and Apparel Policy (2020-25) and any subsidies should be claimed by the relevant textile companies on an ex-post basis through rebate mechanism from the concerned government department or agency directly.
Accordingly, the Power Division has proposed changes in the Textile and Apparel Policy (2020-25) regarding the chargeability of the electricity rates on the textile and other related sectors.
In this regard, it is apprised that the draft summary of the Ministry of Commerce on Textile and Apparel Policy (2020-25) was not shared with the Power Division. Now the Power Division has proposed certain changes in the said policy.
Under the existing clauses of the policy, electricity will be provided at 7.5 cents (USD) per kWh. Power Division has proposed an amendment that electricity to be provided at this rate, but on an ex-post basis through the rebate mechanism agreed mutually between the Ministry of Finance and Ministry of Commerce, without affecting the financial liquidity of the power sector.
The rebate will be computed based upon the differential of applicable rate for the respective consumer category and offered rate of the Ministry of Commerce.
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Power Division has informed the ECC that the government would save an estimated amount of Rs. 243 billion during the next five years by charging the applicable notified power tariff rates on the textile sector and subsidies should be claimed under the rebate mechanism.
“The intended savings on account of the proposed flat rate for electricity are not certain but rather they will be dependent upon the difference of applicable rates of electricity and the offered rate of Ministry of Commerce,” the Power Division to the ECC added.
