Government decides to end subsidy for
In a major setback to the flagship initiative to increase
exports of the country, the government has decided to take back
the energy package (RLNG at $6.5 per MMBTU, and electricity at
7.5 cents per unit) earlier extended to zero-rated sector till
June 30, 2019. The government has also extended assurance to the
International Monetary Fund (IMF) that it will do away with zero
rate status to five industrial sectors (textile, leather,
carpet, sports, surgical).
“From the next budgetary year, there will be no energy
package that earlier the government had extended to zero-rated
industry, and the decision has been reversed under IMF
pressure,” a senior official close to a government adviser
confirmed this to media, but in the next instance he added that
the final decision is yet to be taken by the cabinet after due
This will certainly trigger, the official said, a massive
decrease in exports which may touch $24 billion this year. The
government had earlier carved out the plan under which export
industry was provided the RLNG at $6.5 per MMBTU and electricity
at 7.5 cents per unit at par with the provision of the two
inputs of regional economies of India, Bangladesh and Vietnam to
ensure the products of Pakistan competitive in the international
market but withdrawal of the energy package from the export
industry and doing away with the zero-rated sector will make the
export industry non-competitive in the global market.
He said that the IMF which is not allowing any kind of
subsidy has stepped up pressure on the government and to end the
zero-rate industry and withdraw energy package. The IMF also
pinpointed saying that Karachi-based textile industry has been
provided subsidized gas and electricity tariff for an increase
in exports, but the major chunk of its production is sold out
within the country to meet domestic needs.
Patron-in-chief of All Pakistan Textile Mills Association (APTMA)
Gohar Ejaz responded to the development, saying that this
decision will bring down the exports from $24 billion to $21
billion and it will put the exports of Pakistan in jeopardy.
He mentioned that industry in Sindh is getting gas at $4 per
MMBTU and 70% of the textile industry of the country, which is
in Punjab, will be getting the gas at $12 per MMBTU.
Ejaz said high-level delegation of APTMA will soon meet with
the adviser to PM on Commerce, Textile, Industries, and
Investment to this effect and will raise concerns on the
decision to take back energy package and zero-rated status to
export industry. In addition, APTMA will also meet Adviser to PM
on Finance and Revenue and Economic Affairs Dr. Hafeez Shaikh
and FBR Chairman Shabbar Zaidi.