APTMA Urges Swift Implementation of Power Tariff Adjustment for Industrial Competitiveness

In response to the government and SIFC's recent announcement to eliminate cross-subsidy from power tariffs for industrial consumers, reducing them to 9 cents/kWh to align with regional competitors, the All Pakistan Textile Mills Association (APTMA) is pressing for the immediate execution of this crucial measure.

APTMA, in a press statement, underscores the potential advantages of this adjustment, describing it as a vital structural reform necessary for Pakistan to regain competitiveness in international markets. The proposed correction to the cost structures of energy-intensive sectors holds the key to revitalizing the country's industrial strength.

The shift to a 9 cents/kWh power tariff is anticipated to reverse the declining power consumption among industrial consumers. Additionally, it is expected to boost power consumption to the extent that any revenue losses in the power sector resulting from the price reduction will be outweighed by a positive volumetric effect.

Furthermore, this move is poised to address the escalating circular debt, a persistent issue despite the notable increase in energy prices over the past year.

Inflated energy costs have compelled numerous firms to curtail production, leading to job losses and diminished economic activity. Pakistan is witnessing a rapid deindustrialization trend, evident in the decline in power generation and consumption, particularly among large industrial consumers.

The nation finds itself ensnared in a cycle where rising power tariffs contribute to declining consumption, triggering subsequent tariff increases. This unsustainable situation is detrimental to Pakistan, given its large population, youth demographic, and formidable economic challenges.

Over the next five years, Pakistan faces an annual gross external financing requirement exceeding $25 billion. Bridging this financial gap necessitates either delving deeper into the debt trap or enhancing exports, as outlined in the press statement.

Reducing the power tariff to 9 cents/kWh is not merely about restoring industrial competitiveness; it is a strategic move to reinvigorate the engine of the Pakistani economy. This adjustment is anticipated to stimulate exports across various sectors, fostering growth in associated industries and services, resulting in job creation, increased foreign exchange earnings, and broader economic stability.

In the fiercely competitive global economy, Pakistan must provide a conducive business environment to thrive. Rationalized energy costs play a pivotal role in creating such an environment. APTMA expresses its readiness to collaborate with the government and other stakeholders to ensure the long-term success of the Pakistani economy.

The press statement concludes with a call to the government, urging the swift implementation of the plan to rectify power tariffs for industrial consumers, emphasizing the urgency of the matter.