APTMA seeks 6-month winter tariff for exporters

ISLAMABAD: All Pakistan Textile Mills Association (APTMA) has demanded the government for a six-month winter tariff category for exporters and the cost of service tariffs – minus stranded costs, distribution losses, and cross-subsidies – for domestic and international competitiveness.

APTMA demanded for wheeling B2B contracts with a wheeling/use of system charge of up to 1 cents/kWh, all-inclusive, excluding cross-subsidies and stranded costs. It also asked the government to allow hybrid bulk power consumers (BPC) to maintain both B2B and grid supply, but without any penalty if the PBCs exit from grid supply.

Government should raise the cap on solar net-metering for industrial consumers from 1MW up to 5MW. This would add 5,000MW of solar energy at the point of usage, with no upfront investment or guarantees from the government, it urged.

These demands were made when APTMA representatives called on the minister of commerce, minister of energy, and members of the Federal Board of Revenue. APTMA appreciated the commerce minister for his role in reigning in the exchange rate and controlling volatility.

APTMA representatives also spoke about the high power tariff of 16 cents/kWh for industry, and the uncertainty surrounding the availability and pricing of gas/RLNG. They called the current tariffs unsustainable, including a cross-subsidy of Rs10.85/kWh to non-exporting sectors.

As it stands, the textile industry has an export capacity of $2 billion/month, of which $650 million worth of export industry is closed. If electricity prices for exporters continue to remain high, a growing number of firms will be forced towards closure, APTMA members said.

“This is evidenced by the 12 percent year-on-year decline in textile exports for September 2023, while textile exports of our regional competitors, including India, Bangladesh, and Vietnam, continue to increase.”

The ministers of commerce and industry informed members that a solution was close to being found to ensure the availability of gas/RLNG for industry, and disparities in pricing were also being addressed.

The textile millers also spoke on the promised Rs8,500/mound support price for farmers. However, they said that due to the closure of textile industry, the price currently stands at R7,500/mound. If current power tariffs prevail, further closure of industry will cause cotton prices to plunge even further, with severe implications for vulnerable segments, including farmers, they added.

Discussions were held with the FBR on delays in the processing of sales tax refunds faced by several members, which was causing a liquidity crisis in the industry. It was conveyed to them that refunds for many industry taxpayers were pending, and refunds that were to be issued within 72 hours by FASTER were also being inordinately delayed.

Moreover, a large number of sales tax claims were being deferred by the system, were not being processed by the field officers. Refund claims against provincial sales tax invoices are also being rejected or deferred due to the non-availability of automated verification of the provincial invoices, resulting in accumulation of refund of billions of rupees.

FBR was also made aware of the need to include indirect exporters (ie, upstream suppliers of exporting firms) in the FASTER system. They asked to apply the system onto the entire textile value chain.

The FBR appreciated the feedback and assured of cooperation. It said that timely and mutually agreeable solutions would be found for these problems. APMTA also assured FBR of its cooperation in assisting to counter tax fraud committed in sales tax refunds.