The government has finally taken notice of the lack of progress being made in the production sector in relation to exports, and has looked to rectify stagnant output by providing a cut on power tariffs. This is a direct attempt to rejuvenate export output and work towards improving our faltering balance of payments, which is needed to provide some badly needed injections into the economy through production. For this, the government must be commended.
Pakistan’s export sector is fraught with many problems but the high cost of production and the lack of reliable energy supply top the list. Power tariffs naturally make a big chunk of the cost required to produce, and with this step, the government has provided an opportunity for producers to bring down this value. What the production sector must remember however, is that the gains in export sales will only be fully realised if we manage to keep our sale prices down. The devaluation of the Pakistan Rupee has been a blessing in disguise in that sense. But even with that in mind, exporters might initially have to keep their profit margins low to increase sales. The objective here is to boost sales and worry about profits later.
A lot of our hopes and dreams regarding the rejuvenation of the national economy are pinned on improving our export balance and allowing for a greater amount of Pakistani commodities to permeate the international market. It is hoped that we manage to see a turnaround on this front soon. The economy desperately needs a reset, and a rise in exporting numbers could provide exactly that, in a very short period of time if we sell in large volumes.
Source: https://nation.com.pk/05-Nov-2020/power-tariff-cut