Budget for FY 2021-22: Rs50b subsidy on the cards for export industry

ISLAMABAD: The Pakistan Tehreek-e-Insaf (PTI) government has decided to extend the regionally competitive energy tariff (RCET) regime for the export industry in the budget for financial year 2021-2022, and provide Rs50 billion annual subsidy to the sector.

“Yes, the authorities concerned have agreed to provide the RCET to the export industry in the next financial year,” top officials at the commerce ministry confirmed to The News.

During the next financial year, the government will provide the export industry electricity at 7.5 cents per unit, and RLNG at $6.5 per MMBTU with an impact of Rs50 billion in a year. The government will provide a subsidy of Rs10 billion to state-owned gas companies for providing gas at $6.5 per MMBTU to export industry and Rs40 billion subsidy to power division for provision of electricity at 7.5 cents per unit, it was learnt.

With the decision to extend the RCET, the surge in textile export up to $16.5 billion is expected till June 2021, which will help the country take total exports up to $27 billion in June 2021 and $30 billion in June 2022. In the next financial year, textile export will go up to $20 billion because of continuation of the RCET regime. Special Assistant to Prime Minister on Power and Petroleum Tabish Gauhar said that the government would have to extend the subsidy of Rs50 billion (Rs10 billion against provision of gas at Rs6.5 per unit and Rs40 billion against electricity at 7.5 cents per unit) in the next financial year and power division wants the commerce ministry to arrange for the required subsidy from the finance division on time to avoid a build-up in the circular debt in this head.

Sources in the commerce and textile ministry said that apprehensions of power division about release of budgeted subsidies have been addressed by the financial managers at the finance ministry.

Not only to maintain, the sources said, the existing pace in surge of export, but also to provide more stimulus to the exports, Finance Minister Shaukat Tarin and Adviser to Prime Minister on Commerce, Textile and Investment played crucial role to prepare the mind of the government that strongly believes in growth-oriented budget to accord approval to the RCET in the next budget.

They said that Pakistan Institute of Development Economics (PIDE) also carried out a study which recommended continuation of the RCET to the export industry, saying it played an important role in the surge of current year’s exports.

The textile industry has capitalised, they said, on the given incentives to help the government achieve the ultimate aim of export maximisation, job creation and realisation of economic prosperity. Pakistan’s export industries (including textiles) witnessed an exceptional growth of 9pc in 9 months of FY21.