Govt considers slashing gas, power tariffs to ease cost of doing business

LAHORE: Government is likely to reduce industrial tariffs of electricity and gas within the next couple of days, the finance ministry’s chief said on Saturday in a response to businessmen’s demand to lower cost of doing business.

“Gas and power rates would be lowered possibly in the next 10 days,” Adviser to the Prime Minister on Finance, Revenue and Economic Affairs Miftah Ismail said in a meeting with the office bearers of All Pakistan Textile Mills Association.

Ismail, however, rejected the demand of Punjab-based industries to equalise gas rates. “This is not possible as gas used in Punjab is imported,” he said.

The adviser said government is taking measures to lower cost of doing business through ensuring affordable tariffs of electricity and gas.

The official assured the businessmen of compensation for 28 percent suspension in gas from the system, which has been replaced with re-gasified liquefied natural gas (RLNG), he added. “The government would compensate the excess amount paid for a 28 percent additional RLNG use.”

Currently, there are two RLNG terminals with a capacity of 1.2 billion cubic feet/day to meet fuel requirements of Punjab-based gas-based power plants.

Prime minister’ adviser said rebate on sales tax on packaging materials will not be possible in the upcoming budget. The adviser said cost of doing business in Punjab and Sindh is almost same “though the factors that increase cost are different”.

“Punjab industries pay higher price for gas and the industries in Karachi have to pay very high price for water,” he added.

“In addition, they (Karachi’s businessmen) are subjected to bhatta (extortion) and security costs.”

Ismail said he had relocated one of his potato chip units to Lahore after availability of RLNG.

The finance ministry’s official said government is not providing free land to foreign investors (who) “will have to operate on same concessions that are available to the domestic investors”.

On shortage of cotton crop, the official said the figures show that the crop size would be more than 12 million bales during the current season.

But, he conceded that the growers are gradually shifting from high value crops to low-value added crops.

“Sugarcane has encroached on the cotton land,” he said. Ismail said the matter of Chinese currency’s use in bilateral trade has not properly been reported.

“The government is studying the pros and cons of the trade.” PM adviser said exports are moving up after three years of decline. Economy is in good shape and is expected to grow at six percent of the GDP this year.

“The economy is strong enough to continue to grow despite some strains in our relations with the United States,” he added.

“The impact of US aid on Pakistan’s economy has been minimal and would not affect our growth.”

The finance ministry’s official said the fiscal deficit would be contained to five percent of the GDP even ahead of elections. “Fiscal deficit in the first six months of this fiscal year stood at 2.3 percent.”