LAHORE - Facing five-day gas closure and up to 10hours daily power breakdowns, the Pakistan Dairy Association has asked the government to take measures on war footing to overcome the ongoing worst energy crisis and enhance the power generation, as the situation is fast heading towards a point of no return.
“The industry is one of the biggest victim of prolonged power outages that arehampering the industrial growth. The govt has to take some bold steps to improve economy, as dairy industry in Punjab is trying to cope with growing cost of production because of gas and electricity shortages, high power tariff and stuck-up sales tax refunds,” observed PDA senior vice chairman and Haleeb Foods CEO Faisal Malik.
While talking to The Nation, he said that Pakistan’s dairy industry is losing billions of rupees in potential revenue annually due to excessive power outages currently rocking the whole country.
“The smooth and non-stop electricity supply to dairy industry can reduce the packaged milk prices significantly, as the industry is suffering from 10hours power loadshedding, thus increasing its cost to almost double owing to dependence on in-house high cost generation.”
Pakistan Dairy Association senior vice chairman said that due to three times hike in cost of production along with unmanageable liquidity crunch, causes a sharp reduction in production, lifting their rates automatically. However, the prices can be cut by just providing continuous power supply to industry, he claimed. Faisal Malik, who also served on key posts of the KESC, stated that in June 2013, electricity generation hovered around 13,000MW while in June 2014- after a period of one year of the new govt- electricity production has still reached 13,000MW and there is negligible addition in the power generation capacity.
“In the same way, multiple-year circular debt remained around Rs.500 billion during the past govt while the single-year circular debt is piled upto Rs350 billion.”
It is unfortunate that the last government doubled the power tariff in five years while the new govt has raised the rate by 50 percent just in one year. “This massive increase in the electricity prices in the first year of the newly-elected government could not resolve the problem of load-shedding despite the fact that the prior to elections, the government had promised that it would resolve the electricity problem in the country.
Haleeb CEO said that construction of the large dams is the only solution to provide electricity at very nominal cost, as presently, electricity is almost biggest contributor of the CIP inflation due to power generation through thermal means, he observed. Quoting the State Bank’s Inflation Monitor, he said that due to declining hydal power generation, the electricity contribution to CPI rises to 15.82 per cent in June 2014 which was zero in June 2013.
While the contribution of power tariff in CPI has been rising, the effect on sale of packaged milk-the only authentic quality milk available- will be negative as kitchen items, including milk are going out of the reach of masses very fast.
He said the government should provide level-playing field by raising gas and power supply to the industry to help industry cut their energy costs and release billions of rupees stuck in sales tax refunds, as these factors have rendered Punjab industry uncompetitive within the country.
“The government has to tackle energy crisis, economy and extremism simultaneously which proved to be a big challenges.”
Faisal Malik also expressed the hope that the new government would take energy shortage as a challenge, enabling the industry to perform at optimum level, besides attracting new investment and increasing exports.