Trade ministry seeks ECC approval for RCET

ISLAMABAD: Commerce Ministry was looking at the Economic Coordination Committee (ECC) to approve Regionally Competitive Energy Rates (RCET) for five exporting sectors during 2022-23 to maintain high export growth.

The ministry prepared a summary to seek ECC approval for textiles, including jute, leather, carpet and surgical and sports goods sectors. It seeks approval of gas tariff at $9 per MMBTU and electricity rate at 9 cents per unit from July 1, 2022 under the RCET.

In the summary, the ministry pleaded that these sectors were responsible for approximately 65 percent of total exports. RECT, including other measures, helped these sectors achieve a historical high level of $31.79 billion worth of exports, showing an increase of 25.64 percent as compared to FY 2020-21, it noted.

It should not be out of place to mention that the amount of Rs20 billion for electricity and Rs40 billion for RLNG have been allocated under Federal Budget 2022-23 to supply energy at concessionary tariff to five export-oriented sectors.

However, the commerce ministry also asked for a financial commitment from the Finance Division that additional funds if required by the Power and Petroleum Divisions would be provided to continue the supply of energy to export-oriented sectors on concessionary tariffs.

The Ministry of Energy (Power and Petroleum Divisions) might apprise the Finance Division about the budgetary situation in time, and place a summary for supplementary grant allocation before the ECC for consideration.

The summary also refers to a high-level meeting that was held in the PM house on July 7, 2022, with Prime Minister Shehbaz Sharif in the chair.

Federal ministers for finance, commerce, power, petroleum; and representatives of finance, commerce, power and petroleum divisions and textile industry attended the meeting on prevailing issues of tariffs and availability of gas/RLNG and power.

Keeping in view the proposals of the textile industry and budgetary space available, it was agreed in the July 7 meeting that electricity at US cents 9/unit and RLNG at $9/MMBtu all-inclusive would be provided to export-oriented sectors.

However, only 50mmcfd would be supplied to captive power plants of export-oriented sectors on the Sui Northern Gas Pipeline Limited (SNGPL) network, till the time supply-related issues get settled. Further, the textile industry has shown willingness to shift its captive power plants, using indigenous gas primarily for power generation in Punjab, to the national grid.

However, it was also pointed out that for ensuring uninterrupted supply and reliability of grid electricity, it was necessary to sort out issues of new connections, load enhancement, and transmission and distribution in the first place.

In case of ECC approval, the federal cabinet would ratify, and RCET rates would be notified from July 1, 2022 to June 30, 2023.

On July 19, All Pakistan Textile Mills Association (APTMA) patron-in-chief Dr Gohar Ejaz also wrote a letter to Prime Minister Shehbaz Sharif asking for notification of RCET.

He had pointed out that the country could face export losses worth $1 billion in addition to the $1 billion already lost by the textile industry in the wake of 15-day gas suspension to export sector from

July 1.

“Further export loss of over 30 percent is certain as the government has yet not notified the agreed RECT,” he said, adding that the industry was getting very little gas and grid electricity was also of poor quality.