Karachi industrialists urge Senate chairman to fast-track crucial subsidy release

KARACHI: Industrialists in Karachi are requesting the assistance of Saleem Mandviwala, Chairman of the Senate Standing Committee on Finance, to hasten the disbursement of an incremental subsidy package.

In a letter addressed to Mandviwala, the Pakistan Hosiery Manufacturers Association (PHMA) stressed the financial difficulties faced by local industries, highlighting losses amounting to Rs150 billion ($532 million) due to insufficient support.

The PHMA noted that Karachi’s industries are struggling to compete with companies from other regions, with the steel sector being particularly affected. They criticised the lack of assistance as discriminatory, given the serious challenges confronting the industrial sector.

This appeal comes amid ongoing issues related to a power relief scheme introduced last year by the Power Division. The initiative aimed to encourage electricity consumption during the low-demand winter months by offering reduced rates of PKR 25 per unit for incremental usage over a six-month period.

While the business community welcomed this move, PHMA Chairman Jawed Bilwani expressed concerns over K-Electric’s failure to extend the benefits from previous relief measures announced by the National Electric Power Regulatory Authority (NEPRA).

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In the letter, the PHMA reported extensive industrial shutdowns and a downturn in the steel sector. The association pointed out that while only 17 percent of the disputed subsidies are connected to K-Electric, the remaining 83 percent must be addressed by the government, independent of the litigation’s outcome.

The PHMA contended that delays in resolving these issues stem from misunderstandings within the Ministry of Energy, which erroneously believes that winning the litigation would absolve the government of any payment obligations.

This assumption runs counter to NEPRA’s directives, as the majority of the subsidies are not tied to K-Electric and need to be resolved via government funding and fuel cost adjustments.

Moreover, the letter mentioned that although previous budgets had allocated subsidies, delays in litigation and inadequate responses from the Ministry of Energy and NEPRA have resulted in even undisputed amounts being withheld.

To facilitate a quicker resolution, K-Electric and affected consumers have suggested submitting a statement to the Islamabad High Court, urging the government to release the undisputed funds.

The PHMA has called on the government to distinctly separate the disputed from the undisputed amounts, provide its consent to the Islamabad High Court, and instruct NEPRA and the Ministry of Finance to promptly release the pending subsidies.