There is a dire need to stop misuse of RLNG: Tarin
Ibn-e-Ameer
Islamabad: Minister for Finance and Revenue has said that there is a dire need to stop the misuse of RLNG gas in industry.
The government should not extend subsidies to those industries which are expanding their local market share on the basis of the relief, he said while considering a case of continuation of concessional rate of electricity and RLNG gas to export-oriented sectors.
Further, he stated in a meeting of the economic coordination committee (ECC) that government may not even extend it to low value-added industries next year. However, current momentum should not be disturbed at this stage, he said.
The economic coordination committee discussed the issue of misuse of RLNG. It agreed to form a committee to deliberate the issue and submit recommendations to the BCC.
The TORs may include the misuse of RLNG by in-efficient captive power plants for generating electricity, stay orders sought by the industry getting subsidy from the government, refusal to conduct an audit in spite of the decision of the cabinet etc.
The overall objective would be to stop the misuse of gas by the industry.
The ECC stressed that the State Bank of Pakistan or PIDE should conduct a study to see the impact of concessional rates of electricity and RLNG on the export-oriented sectors.
The study should focus on giving due consideration to other relevant factors.
The Commerce division urged to provide energy at regionally competitive prices especially in the COVID-19 scenario to sustain the exports.
Read More: Govt moves now to stop export subsidy scandal
In this regard, the commerce division submitted proposals for consideration and approval of ECC.
It recommended providing electricity at US cents 9 per kWh all-inclusive to export-oriented sectors namely textiles including jute, leather, carpet, surgical and sports goods during Financial Year 2021-22.
Commerce division further recommended providing the RLNG gas at the US $6.5/MMBTU all-inclusive to export-oriented sectors during Financial Year 2021-22.
The Finance Division may give a financial commitment to provide additional funds if required to continue concessional energy rates to export-oriented sectors.
However, the Ministry of Energy may appraise relevant ministries regarding the budgetary situation in time so that the Commerce Division may place a summary for supplementary grant allocation before the ECC of the Cabinet for consideration.
The forum observed that the present Government is making strenuous efforts to beat exports.
For this purpose, the government has provided electricity and RLNG gas to export-oriented sectors at subsidized rates. ECC members stressed the need to conduct a competitiveness study to see the impact of subsidy on exports.
The government had conducted a study in the past that proved hardly any correlation between the two.
However, an objection was raised on it on the pretext that it was a single factor study and the issue needs to be analyzed by considering all relevant factors.
SAPM on Energy emphasized the need for a targeted subsidy.
Read More: Govt notifies relief package for export-oriented industry
The Economic Coordination Committee (ECC) of the Cabinet considered the summary Continuation of Concessional Rates of Electricity and RLNG gas to Export Oriented Sectors” and approved the summary.
It also constituted a Committee under the convenorship of Minister for Energy and consisting of Minister for Industries & Production, Special Assistant to the Prime Minister on Power & Petroleum, Adviser to the Prime Minister for Commerce, Deputy Chairman Planning Commission and Mr. Anwar Shaikh, Senior Joint Secretary Finance Division to deliberate the issues of misuse of RLNG supply at concessional rates to export-oriented industry.
It will submit viable recommendations to the ECC for consideration.
