Exporters concerned at taxes on power supply

FAISALABAD: The Pakistan Textile Exporters Association (PTEA) has expressed concern over imposition of taxes and fuel adjustment surcharges on power supply as it will negatively hit the export growth. In a statement here on Saturday, Pakistan Textile Exporters Association chairman Sohail Pasha expressed his disappointment over Power Division’s decision terming it anti-export move.

This unwarranted action would precipitate a crisis in the textile industry which was delivering on its commitment to enhance exports, he lamented. Quoting the ECC decision, he said that it was clarified that all elements (financial cost surcharge, Neelum-Jhelum Surcharge, taxes, fixed charges, quarterly tariff adjustment and fuel price adjustment) would not be charged to the zero-rated sectors. This had resulted in substantial quantitative increase in exports; however, barely a year later, the Ministry of Energy instructed Discos to charge add-ons and surcharges raising the aggregate cost to 13 cents per unit, he continued. How would exports when subjected to 13 cents/KWh expected to compete with those from India and Bangladesh at 7-9 cents/KWh and China between 7.5-10 cents/KWh and how exporters would pay the difference of tariff arising from the retrospective effect when it was not factored into the price of exports already made, he questioned.

He demanded the government fulfill its commitment of regionally competitive energy of 7.5 cents/KWh all-inclusive and withdraw the decision of imposition of surcharges, taxes and fuel adjustment on power supply to export-oriented sectors as it would reverse the growth in exports.

PTEA patron-in-chief Khurram Mukhtar said that with a view to increase the investment and broaden the industrial base, the State Bank had enhanced financing limits for exporters under the subsidised loan schemes including Export Finance Scheme (EFS) and Long Term Finance Facility (LTFF), however, the same had not yet been implemented. Financing limits for exporters under LTFF and EFS had been burst and banks were reluctant to award financing facilities, he told. This had created immense problems for textile exporters as in absence of finance, they were unable to expand their export turn over. He demanded the State Bank direct the commercial banks to ensure availability of financing limits under Export Finance Scheme and Long Term Financing Facility to exporters in accordance with sanctioned lines. Similarly, extreme cash flow crunch had squeezed the financial streams as major portion of exporters’ working capital is stuck in custom rebate regime creating severe financial stress, he added.