ISLAMABAD: Prime Minister Imran Khan Tuesday announced a major relief package for industries by abolishing ‘peak-hour’ tariff for all industries, alongside a 50 percent concession on additional electricity consumption to boost industrialization and increase exports.
Addressing a news briefing here along with federal ministers and finance adviser, he said the electricity generated in Pakistan was 25 percent more expensive than in India and Bangladesh, due to which our exports were not competitive. “But with the new package, our industry will become more competitive on the international and local levels, which will also have an impact on prices,” he said.
The prime minister said, “From November to June 2021, the Small and Medium Enterprises using additional power will be provided with electricity at 50 percent of the rate.”
Furthermore, for the next three years, he said additional power would be provided to all types of industries at 25pc lower tariff, meaning that full-time off-hours would now be considered for industries. He expressed hope that the new package will boost exports.
In the backdrop of a briefing to the cabinet earlier, where it was told about the increasing number of coronavirus cases, the prime minister directed strict implementation of SOPs.
Imran said the government would not close the industries as the country could not afford a lockdown once again. He emphasized that the provinces should ensure the implementation of TTQ and smart lockdown strategy. However, he appealed to the people to wear masks when going out and to strictly follow the SOPs.
The prime minister contended that the second wave of coronavirus was spreading rapidly in the world and cases were similarly increasing in Pakistan. He said Allah Almighty has been extra kind to Pakistan, we have made wise decisions and Allah has been gracious. However, he clarified that if the coronavirus situation turned alarming, industries and businesses would have to run with SOPs.
Explaining the reasons for the high cost of electricity, Imran Khan said that expensive power contracts were signed by the previous governments due to which our industry had to compete with low-cost power-consuming regional industries. Hepointed out that Pakistan’s exports during 2013 to 2018 declined, falling from USD25 billion to USD20 billion. He said that his government tried to increase the exports soon after coming to power because the country’s wealth is directly linked with exports, which would strengthen the rupee. “We have given lots of concessions to exporters and Pakistan is the only country in the Sub-continent whose exports emerged from the effects of the epidemic fast. Pakistan has dealt with the epidemic situation in the best manner and that has been recognised globally,” Imran said.
The prime minister said that he was happy that despite the global epidemic, cement sales in Pakistan had reached record levels, sales of vehicles and motorcycles had also recorded an increase, while the construction industry was also developing, which would create more employment opportunities. “The flourishing industry will bring wealth to the country, which will enable us to repay our debts,” he said.
Under the new package for an industrial consumer, if the consumer has used 100 units in November last and this November the consumer consumes 150 units, then the 100 units will be charged with normal rates while the additional 50 units will be charged 50pc less than the normal tariff. “So whatever amount of electricity they use in addition to the level that they used last November, it will cost [half] of what it did previously,” the prime minister explained. “For example, electricity that cost Rs16 per unit will now cost Rs8.”
He said the government had decided that SMEs would get additional electricity at reduced rates from Nov 1 till 30th of June next year.
Minister for Industries and Production, Hammad Azhar, said the peak-hour [7 pm to 11 pm] power tariff was always around 25pc higher than off-peak hours. After removing the peak-hour concept for industries, apart from a 50pc cut in tariff on additional consumption, their bills will minimize sizably. Since the prime minister has stressed on facilitating the industries with low input costs, production can be increased and, in turn, more employment generated. “So we have made a huge decision today, a tough decision, and the cabinet has approved it.” Azhar said that the decision means that “industries could avail off-peak hour benefits around the clock.”
The SMEs [B1, B2 and B3 connections] will enjoy a 50pc cut in tariff on additional consumption up to June 2021. For other industries (B1, B2, B3, B4, and B5 connections), the cut will be 25pc for the next three years.
“The cement, fertilizer, auto, motorcycle, textiles, steel, and other large scale manufacturing is growing. Orders are coming; industries are increasing their working shifts. This will create more jobs and market activities will also witness a boom. Our products will become competitive in the international market,” the industrial minister said.
Federal Minister for Planning, Development, Reforms and Special Initiatives Asad Umar said that energy reforms are continuing since the government came into power. “With this decision, the wheel of the economy will move faster.” During the Covid-19 pandemic, we had tried our best to insulate the poor from the negative fallout of this disease and did not place a ban on their works and jobs. “We will not close the industries at any cost, it will run now 24 hours,” he said.
The Federal Energy Minister, Omar Ayub Khan, said that “we are facing the landmines what the previous governments had laid for us in the energy sector (including costly power agreements). Now we are coming out of it.” Earlier, 70pc of our energy generation was based on imported fuel (LNG, fuel oil and coal) while renewables (solar, wind, etc) were discouraged. They conducted solar power agreements as high as Rs24/unit whereas we have made the agreements at Rs6.5/unit. He said by 2025 the share of renewables will be 25pc in our energy mix. By 2030, it will be increased to 30pc. The volume of renewables will be increased to 18,000MWs by 2030. The hydropower share will be increased by 30 percent from the current level and the local Thar coal’s share will also be increased up to 20pc.
Adviser to Prime Minister on Finance Dr. Abdul Hafeez Shaikh said that we have brought stability to the economy. “Pakistani people are the centre of our policies. We have increased tax collections by 17pc in the last four months. The government has also cut its own expenditures while kept the civil and military expenditures frozen. We did not borrow even a single penny from the Central Bank [it was a condition of the IMF]. Our primary balance is in surplus. We have brought down the Current Account Deficit from $20 billion to zero now. “We had paid refunds of Rs250 billion to the industries and businesses. On affordable houses, we have also given 90pc tax exemption to builders.”
He added, “Our construction industry is also booming. Our remittances, exports, industrial growth, Current Account Surplus, primary balance are fast improving. Our stock market has become the top performer in Asia and fourth in the entire world. The Pakistan Stock Exchange (PSX) witnessed outstanding performance and was ranked fourth in the world and the first in Asia among the most performing markets. We had repaid Rs5,000 billion (more than $31 billion) loans, what the previous government had taken.”
“During the period from June 30 to November 1st, there was zero percent increase in the country’s debt,” he concluded.Meanwhile, Federal Minister for Information and Broadcasting Shibli Faraz Tuesday blamed the Sindh government for not releasing wheat, which created the supply and demand issue.
Speaking at a news conference here after attending the federal cabinet meeting chaired by Prime Minister Imran Khan, he alleged that the Sindh government with mala fide intentions announced Rs2,000 per 40kg as the wheat support price, which was the federal government’s mandate. “With this support price, will flour be cheaper or costly? Definitely it will be costly,” he remarked.
Regarding the price of sugar increasing to Rs110 per kg despite its import and the government’s announcement of reduction in its price, the minister said the prices would come down and that the government was working on proper record keeping, as it had to rely on the mills data, which was manipulated by the owners.
He recalled how the Sindh government had tried to mislead the federal government on Covid-19 adding that the results would have been disastrous had the Centre followed it. He blamed the Sindh government for the sugar and wheat crisis.
He called the policy of Sindh not timely releasing wheat as hoarding and playing politics thereon. He said their role was shameful and the people of Gilgit-Baltistan would ask them about that. About the tomato prices soaring to Rs200 per kg, the minister said the government was aware of it and would take every possible step to bring them down.
“We are in the government because of people. How is it possible that we have no realization of their difficulties? Various steps are being taken to provide relief to them like the USC and Sahulat bazaars. It’s not the government’s job to produce or sell vegetables but it can facilitate and this is what is being done. Various factors are behind the high price of tomatoes,” he noted, showing optimism that the difficult phase would soon be over. He said they would not follow Ishaq Dar, who had suggested people to consume chicken, as the rates of pulses were higher.
Source: https://www.thenews.com.pk/print/738772-cheaper-power-for-industry