Wednesday May 29, 2024

Textile sector urges govt not to abolish RCET under IMF pressure

By Khalid Mustafa
February 15, 2023

ISLAMABAD: Pakistan’s textile industry in Punjab would likely close down its operations once the government withdraws the regionally competitive energy tariff (RCET) of Rs19.90/unit and gas tariff of $9/MMbtu in submission before the IMF.

The country would face further deterioration in the balance of payment crisis as pulling out of RCET would result in a loss of $10 billion per annum, the All Pakistan Textile Mills Association (APTMA) said on Tuesday.

In a communication sent to the financial managers of the incumbent regime, APTMA said “Punjab’s textile industry was being thrown under the bus”, and argued that the closure of the industry would result in massive unemployment in the country.

APTMA’s Secretary General Shahid Sattar said the textile industry has been asking for an electricity tariff of 9 cents despite the fact that the electricity cost including transmission and distribution losses stood at 8.1 cents/unit if cross-subsidies were excluded as per CPPA and NEPRA calculations.

APTMA wants the government to persuade the IMF to continue the RCET for the exporters, particularly the textile sector, which is vital to make the products competitive in the international market.

“We have invested $5 billion in the textile sector over the last three years, and the textile sector surged to $19.5 billion in the financial year 2022 from $12.5 billion in FY2020,” he said.

If the government succumbs to IMF pressure, the robust growth of 55 percent in exports in FY22 and investment of $5 billion would go to waste.

APTMA asked for immediate intervention of the prime minister and finance minister to stop the withdrawal of the RCET from March 1, 2023. “And more importantly, 60 percent of textile units have already been closed and the RCET tariff withdrawal will lead to total closure of the textile industry in Punjab,” Sattar said.

Reliance on grid electricity at over Rs40/unit would make the Punjab textile industry uncompetitive in the international and local markets and this would result in shifting of the available export orders to other countries.

APTMA also mentioned that the export sector in Sindh was being provided gas at $3.11, whereas in Punjab it was $9/MMBtu.

APTMA wants the government to continue to extend RCET with an electricity tariff at Rs19.90/unit and a gas tariff at $7/MMBTu to the export industry across the country including captive power plants.

The textile industry also urged the government to give gas priority allocation to the export-oriented industry.