Trader urges govt to slash electricity costs and interest rate for economic growth

LAHORE: Patron-in-Chief of the United Business Group (UBG) S M Tanveer has demanded that Federal Finance Minister Senator Muhammad Aurangzeb reduce the power tariff to 9 cents/kWh and the mark-up rate to 12 per cent to boost the national economy in terms of exports, investment, and employment.

“These two steps would stimulate the industry with positive vibes,” he said.

He was speaking to the minister during his visit to the regional office of the Federation of Pakistan Chambers and Commerce and Industry (FPCCI).

Saquib Fayyaz Magoon, Acting President of FPCCI, Dr. Gohar Ejaz, former Caretaker Federal Minister for Commerce, Industries, Investment & Interior, and Chairman of the National Economic Think Tank, Zaki Aijaz, Regional Chairman and Vice President of FPCCI, were also present.

“The business community can generate taxes only if it is allowed to earn,” he stressed, adding that a business-friendly environment is essential for industry and trade to grow and generate revenue.

He highlighted that there is no justification for exorbitant interest rates at 20.5 per cent when inflation has already decreased to 12 per cent.

Providing the industry with electricity at a rate of 9 cents/kWh would result in an increase of six billion dollars in exports, an additional demand of over 300 megawatts on the grid, revenue of Rs500 billion, and a reduction of Rs240 billion in debt servicing. He suggested to the finance minister to divert Rs240 billion from PSDP to support this cause.

The industry has already been paying Rs240 billion in cross-subsidies and over Rs150 billion in stranded costs. He informed the finance minister that the business community cannot secure orders from the international market when the government charges it more under cross-subsidies. He questioned why international buyers would prefer Pakistan over Vietnam, Bangladesh, and other countries with cheaper energy rates.

He said the export industry is declining, and Pakistan is losing market share rapidly because electricity is more than twice as expensive as in competing countries. As a result, $600 million/month in export capacity remains unutilized, even though a rapid increase in exports is the only remedy to meet $24 billion annually in gross external financing requirements, balance of payments issues, and job creation.

With the prevailing energy prices, he feared, 60-70 per cent of the industry will shut down, especially with the significant increase in domestic gas rates for the industry. Tanveer said uncompetitive energy tariffs are hindering export growth and investment in the export sector.

He mentioned that all 228 chambers and trade associations across the country have become panicked after the announcement of the federal budget.

“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.