He strongly condemned the irrational and illogical increase to Rs 3.90 per unit, effective for retroactive collection from 2015, warning that this decision would be the last nail in the coffin for Pakistan's export Industries, especially the leather sector.
He said that leather, which is Pakistan's second-largest export industry contributing significantly to the country's GDP, is already in severe facing severe problems. The cost of doing in Pakistan is already high with exporters already unable to compete with regional competitors, particularly China, India and Bangladesh.
The sudden increase in electricity charges will push Pakistan's leather exporters out of the International market. He said the cost of doing business in Pakistan is very high and increases in electricity charges are one of the reasons behind it.
Anjum Zafar said that utilities charges in Pakistan, in comparison with those for regional competitors (appended below) are much higher. Pakistan's leather industry is already facing numerous problems in execution of export orders owing to its high cost of production. As a result it is losing its share of the International markets, with the result leather exports have already decreased to an alarming extent for the past three years:
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REGIONAL COMPARISON OF COST OF DOING BUSINESS
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Inputs Pakistan Bangladesh Pak % India Pak % Vietnam Pak %
Higher than Higher than Higher than
Bangladesh India Vietnam
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Electricity/kwh $ 0.11 $ 0.09 22% $ 0.09 22% $ 0.08 37%
Gas (Industrial Captive Power)/MMBTU $ 7.68 $ 3.01 155% $ 4.66 65% $ 6.00 28%
Minimum Wages per month $ 135.00 $ 68.00 98% $ 115.00 17% $ 113.50 19%
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He said the proposed increase in electricity charges, particularly their retroactive collection from 2015, would be the highly detrimental to the leather sector.
He said that in this situation the leather sector would be unable to pass on the increased cost of electricity from 2015 to its customers. This was particularly impossible since the increase had not been calculated in the price when the leather was sold. Nowhere in the world, he said, are utility charges increased retroactively, and the proposed increase could push Pakistan out of the world leather market.
Copyright Business Recorder, 2017