APTMA Recommends Dedicated Power Plants for Industries

The All Pakistan Textile Mills Association (APTMA) has recommended dedicating power plants for the industries and wheeling of electricity under the recently introduced Competitive Trading Bilateral Contract Market (CTBCM) regime.

The recommendation was made in a letter after the meeting of APTMA stakeholders with Finance Minister Ishaq Dar in which the Association advocated immediately reviving the Regionally Competitive Energy Tariff (RCET) for Export-Oriented Units (EOUs) at Rs. 19.99 per kWh for electricity and $9/MMBtu for gas/RLNG or 50:50 formula to ensure the regional competitiveness.

APTMA also highlighted the disturbing state of the textile sector due to RCET withdrawal saying the detrimental effects of the current cross-subsidy system must be addressed in order to prevent closure of textile units, save exports and prevent the potential loss of $10 billion in annual exports.

The total cost of a regionally competitive energy tariff (RCET), if the differential is treated as the subsidy/cost is 2.67 percent. APTMA stated that alternative social protection schemes need to be explored in order to ensure the socioeconomic goals instead of extracting these subsidies from industries.

It also emphasized that there is a need to create a favorable environment to foster industrial growth and development by eliminating the exploitation of industries and rectifying economic distortions resulting from the current tariff structure. The cross-subsidies, inefficiencies, and taxes need to be fixed in order to save the textile sector from closure.

APTMA noted that while subsidies cannot be provided when the country is in an IMF program, there should be dedicated power plants for the industrial sector wheeling electricity under the recently introduced CTBCM regime.

The suggestion will require the complete backing of the Finance and Power Division so cross-subsidy and stranded costs should not form part of the open access charges as cross-subsidies and stranded costs cannot be exported.

The government assured to facilitate the transition towards open access to ensure sustainability and competitiveness. APTMA also raised the unresolved issue of RCET in export-oriented units in  LIEDA, FIEDMC, and Sundar industrial estates credit has not been provided despite them being eligible.

Power Division also sought to quantify accumulated liabilities from delay resulting and settle industries’ claims in the meeting.

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