Govt mulls targeted subsidies for export sector

ISLAMABAD: The government on Thursday decided to announce targeted subsidies in the upcoming budget for export-oriented sector based on their performance.

The decision was taken during a meeting presided over by Minister for Finance and Revenue Shaukat Tarin to discuss the new tariff for the industry / export-oriented sectors in the upcoming budget.

Tarin reiterated his firm commitment for accelerated growth with the willing contribution from the business community.

It was decided that for the next budget subsidies would be allocated on the basis of actual consumption and a more targeted approach for disbursement would be adopted.

It was also decided that the growth of export-oriented sector would be the main objective of the government while offering any change/consistency in the rates, so that the industry should use its full potential and play its rightful role in the development of the country.

Minister for Industries and Production Khusro Bakhtyar and Minister for Energy Hammad Azhar were also present in the meeting along with Adviser to the Prime Minister on Commerce Razak Dawood.

Different options for concessional tariff were discussed in the meeting along with their implications on the subsidies, earnings, production and revenue generation.

The meeting noted that there is a need to generate a database which could establish the nexus between tariffs and progress of the export-oriented sectors/industry.

Azhar drew the attention of the participants towards the scarcity of natural gas in the system and the excess units of electricity available at a higher rate, and, to the already decided principle that the domestic users have the first right of use in case of natural gas.

Gas shortfall is expected to more than double at 3.7 billion cubic feet per day (bcfd) within next five years as demand continues to grow with insufficient supplies, according to Oil and Gas Regulatory Authority report.

The demand supply gap during FY2019 was 1,440 million metric cubic feet per day (mmcfd), which is expected to rise to 3,684 mmcfd by FY2025 and 5,389 mmcfd by FY2030.

Natural gas is a major contributing fuel in country’s energy mix. Pakistan has a huge network of transmission (13,452km) and distribution (177,029km) gas pipelines providing natural gas to domestic, industrial, commercial and transport sectors.

It was also acknowledged in the meeting that the least cost units offered by the government have proved beneficial for the overall productive health of the economy especially export oriented sectors.