United Business Group Leader Wants Cut in Power Tariff, Interest Rate

Patron-in-Chief United Business Group (UBG) S M Tanveer has demanded Finance Minister Senator Muhammad Aurangzeb to reduce the power tariff to 9 cents/kWh and a markup of 15 percent to witness growth in the national economy in terms of exports, investment, and employment. He was talking to the minister during his visit to the regional office of the Federation of Pakistan Chambers and Commerce and Industry (FPCCI). “The business community can generate taxes only if it is allowed to earn,” he stressed and added that a business-friendly environment can let the industry and trade grow to generate revenue. He said there is no justification for exorbitant interest rates at 20.5 percent when the inflation has already come down to 12 percent in the country. He stated that providing the industry with electricity at a rate of 9 cents/kWh would result in an increase of $6 billion in exports, an additional demand of over 300 megawatts on the grid, revenue of Rs. 500 billion, and a reduction of Rs. 240 billion in debt servicing. He suggested the finance minister to divert Rs. 240 billion from PSDP to fulfill this demand. He said the industry has been paying Rs. 240 billion in cross-subsidies and over Rs. 150 billion in stranded costs. He informed the finance minister that the business community cannot secure orders from the international market on the stance that the government was charging it more under cross-subsidies. Why would international buyers prefer us against those from Vietnam, Bangladesh, and others getting energy at cheaper rates, he questioned. He said the export industry is dying and Pakistan is losing market share at a faster pace because the electricity is being provided at more than twice that of competing countries. Resultantly, he said, an export capacity of $600 million/month remains unutilized in the country in a situation when a rapid increase in exports is the only remedy to meet $24 billion per annum of gross external financing requirements, balance of payment issues, and job creation. With the prevailing energy prices, he feared, 60-70 percent of industry would shut down, especially when domestic gas rates for industry have been increased manifold. Tanveer said uncompetitive energy tariffs are hindering export growth and investment in the export sector. “Our group had envisioned $100 billion in exports by 2030 when we took over the FPCCI, and we are committed to achieving this goal. However, the current budget has significantly dampened our enthusiasm,” he deplored.