Excess billing to impact exports, BoP: APTMA

ISLAMABAD: All Pakistan Textile Mills Association (APTMA) has told the government in plain words that excessive billing by Power Division against the notified tariff of 7.5 cent per unit to export oriented sector will have disastrous impact on export and balance of payment (BoP) as it will trigger a crisis in the textile sector, which is on way to its commitment to enhance the exports.

APTMA Executive Director Shahid Sattar in a letter written with subject ‘Unjustified excess billing to the export oriented sector’ on Wednesday (January 22, 2020) to Federal Energy Minister Omar Ayub Khan copied to Adviser to PM on Commerce, Textile, Production and Industries and Investment Abdul Razak Dawood, Special Assistant to PM on Petroleum Nadeem Babar, Principal Secretary to PM Muhammad Azam Khan, Commerce Secretary Sardar Ahmed Nawaz Sukhaira and Power Division Secretary Irfan Ali.

According to the copy of letter available with The News, APTMA submitted its strong protest against the unreasonable manner in which the Ministry of Energy has changed its interpretation of very clearly worded SRO and earlier clarifications and has made part of electricity bills for export industrial consumers additional charges such as financial cost surcharge, Neelum-Jehlum surcharge, tax, fixed charges, quarterly tariff adjustment and fuel price adjustment.

Knowing the fact that PTI government had notified 7.5 cent per unit tariff for export oriented sector to ensure regionally competitive tariff, which is available for exporters of Bangladesh, Vietnam and India with an aim to make Pakistan products in international market competitive, Power Division has included in the earlier notified tariff for export industry financial cost surcharge, Neelum-Jehlum surcharge, tax, fixed charges, quarterly tariff adjustment and fuel price adjustment. This has resulted in more increase in energy cost for industrial consumers making Pakistan products uncompetitive, the letter maintained.

The letter says that the textile sector is already investing in new plants and up-gradation as order books are full and the need for expansion and modernisation is being actually felt. However, these orders and the exports are based on costing of regionally competitive tariff of 7.5 cent per unit.

Under these circumstances, the letter noted, withdrawing the commitments of regionally competitive energy of 7.5 cent per unit all inclusive would nullify all the excellent work done by the government over the last 18 months, which has resulted in a substantial quantitative increase in exports.

APTMA has urged the Ministry of Energy to review the matter objectively and withdraw its letter issued on January 13, 2020. Ministry of Energy (Power Division) under its letter has conveyed to Discos to bill all additional charges such as financial cost surcharge, Neelum-Jehlum surcharge, tax, fixed charges, QTA and fuel price adjustment in addition to 7.5 cent per unit.

The letter also mentioned that bills of Iesco for the period of Dec 16, 2019 to Jan 2020 have now been received. These do not reduce the amount payable to 7.5 cent per unit in accordance with the SRO and include all the surcharges especially excluded by the ministry’s clarifications.

In its letter, APTMA builds the argument by referring to SRO 12 of Jan 1, 2019 wherein the ministry had fixed an all inclusive tariff/payments of 7.5 cent per unit for the supply of electricity to the export oriented industry. The notification was made under sub-section (7) of Section 31, of the regulation of generation, transmission and distribution of electric power act 1997 (XL of 1997).

The SRO states, “In order to further rationalise the payments for zero rated industrial consumers, Discos and K-Electric are to receive from such zero rated industrial consumers per above, It is hereby notified that payment from such zero rated industrial consumers shall be reduced up to rate of 7.5 cent per unit (inclusive of special relief package). For billing purpose of zero rated industrial consumers, the dollar exchange rate will be considered as the national bank-end dollar sale rate on the last working day of the preceding month. The difference between the relevant payment due from such zero rated industrial consumers per above mentioned SRO and special relief package for such zero rated industrial consumers notified here under shall be paid to Discos and K-Electric by the federal government as per the notification for rationalisation of process of payments of subsidy.”

As zero rating was withdrawn by the government in July 2019, continuation of policies and facilities to the former zero rated companies was ensured by the government through a clarification issued by the commerce ministry defining the former zero rated sectors as export oriented sector vide F No1(18)/2019-SO (M&I) on Dec 13, 2019.

However, in contradiction of SRO and the clarifications, the Ministry of Energy with its letter dated Jan 13, 2020 conveyed to the Discos to bill all additional charges such as financial cost surcharge, Neelum-Jehlum surcharge, tax, fixed charges, QTA and fuel price adjustment in addition to 7.5 cent per unit.

Given that repeated clarifications had been used by the Ministry of Energy of the all inclusive nature of 7.5 cent per unit tariff, the imposition of additional charges is contrary to law and the clarifications given by the ministry itself. It is further reiterated that the SRO-12 Jan 1, 2019 can only be changed by further notification under law through which it was first notified. The SRO states, “The notification unless amended or withdrawn earlier by the federal government shall continue to remain in field till notification of new tariff for Discos and K-Electric.”

APTMA has asked the Ministry of Energy to review the matter objectively and withdraw the letter of Jan 13, 2020.