Power tariff raise to bring industrial wheel to a halt
RE - The hike in power tariff will have an escalating effect of 15 to 20 per cent on textile sector's cost of product, squeezing the already declining profit margins.
Talking to The Nation, All Pakistan Textile Mills Association (APTMA) Punjab Zone Chairman strongly criticised the announcement of the increase in power tariff by the government and urged it to immediately withdraw the rise.
"There would be a negative effect on the cost side, which eventually impact the margin of textile manufacturers", he said.
He said the tariff hike would raise the industry's cost of product by almost 15 per cent, denting textiles profitability in future. He said they are aware of the govt problems, which it was facing amidst huge shortage of power, urging the govt to adopt industry-friendly policies to enhance production.
"This decision cannot be called wise, as already our wrong policies have cushioned our competitors in the world market, he added.
Majority of the industrialists and manufacturers when contacted by The Nation sternly criticised the government for making an enormous 31 per cent raise in the already high electricity rates, terming it a last nail in the coffin of industry. They said that anti-industry on the dictates of IMF, WB and other donor agencies would not only earn a bad name for the government but would also bring the industrial wheel to a halt.
They said that the repeated increases in the power tariff have already played havoc with the manufacturing sector.
They stressed upon the government to take urgent remedial measures to rescue textile industry from utter ruin and extinction by eliminating this unprecedented hike in captive power generation.
It is to be noted that textile sector contributes more than 60 percent to the total exports of our country, but 31 per cent increase on captive power generation will cripple our textile industry. While 70 to 80 per cent textile and other large scale manufacturing units had their own captive power generating and the recent measure would force them to become sick units besides creating a new generation of unemployed workforce. Over 33 industrial units have ceased their operations in Karachi only owing to recent 31 percent increase in gas tariff while 68 per cent increase in captive power generation was tantamount to murder of industry, particularly of textile industry.
They said that electricity and gas are the main sources of energy for all sectors of economy in Pakistan and withdrawal of subsidies on electricity and gas will further hike the prices of these major sources of energy, which will have multiple negative effects on society.
Tanveer Ahmed Sheikh, President Federation of Pakistan Chambers of Commerce & Industry (FPCCI), observed that 31 per cent raise in tariff is tantamount to murder of industry, especially textile, which is mainstay of the country's exports. Though, the result of tariff rate hike would vary for different industries, however, the badly-hit would be spinning, weaving and garment industry among the textile sector.
Zubair Motiwala, Former President Karachi Chamber of Commerce & Industry (KCCI), said that textile Industry will severely hit in this scenario because for the value added textile industry, electricity has a major share in the energy component of the cost.
Pakistan's inflation rate surged to its highest level in more than 30 years and every stratum of the society is affected by the gruesome price hike of day to day commodities.