PM Imran Khan announces reduced energy costs for industrial sector

Prime Minister Imran Khan on Tuesday announced a package under which small and medium enterprises as well as the industrial sector in general will be able to benefit from reduced energy costs.

The prime minister said that starting November 1, the additional electricity used by SMEs up to June 30, 2021, will be sold at 50% lower the cost.

"So whatever amount of electricity they use in addition to the level that they used last November, it will cost [half] of what it did previously," he explained. "For example electricity that cost Rs16 per unit will now cost Rs8."

He said that these rates will then be revised beyond the aforementioned date.

The prime minister also said that industries in general, even the large scale ones, will pay reduced electricity costs at all times, and the concept of "off-peak hours" will be redundant. "It will be as if its all off-peak hours."

He said that after the coronavirus lockdown period, record-high cement sales have been recorded, as well as high levels of automobile sales. "Our construction industry is also booming."

The prime minister lamented that the service industry was severely impacted during the lockdown period and it was now imperative that our industrial sector be propped up and perform well.

Taking over the briefing, Minister for Industries and Production Hammad Azhar said that the prime minister has stressed on the fact that industries must be facilitated so that with low input costs, production can be increased, and in turn, more employment generated.

"So we have made a huge decision today, a tough decision, and the cabinet has approved it."

Azhar said that the decision means that industries will be able to avail off-peak hour benefits around the clock.

The minister said that in the past, what would happen was that during peak hours, electricity cost for industries would increase by 25% and this practice had been going on for many decades.

"So now we have decided that industries will be able to avail off-peak rates all 24 hours.

"Secondly, industries that make additional use of electricity and fall within the B1, B2 or B3 categories, will get an added 50% off per unit till June 30, 2021.

"And thirdly, across the entire industrial sector — which includes B1, B2, B3, B4 and B5 connections — for the next three years, a 25% discount will be given for utilising additional electricity as compared to the same period last year," Azhar explained.

The production minister said that Pakistan's economy was registering a consistent positive growth rate at a time when the world's economy is experiencing negative growth of -4%.

He said large-scale manufacturing industries such as cement, automobiles, textiles and construction are all witnessing rapid growth, so much so that were unable to meet orders and it had become instrumental that to encourage them to ramp up production, energy costs be reduced.

"We wish for them to operate even during what were peak hours for them, in which they were inclined to remain dormant [due to high costs]."

He said that this will not only lead to greater employment opportunities but will also lead to reduced prices of products and Pakistan will be able to emerge as a more competitive country industrially.

Minister for Planning Asad Umar said that the package announced today was the result of months of deliberations. He said it was unprecedented in Pakistan's history that a power tariff for the next three years be decided beforehand and at such reduced costs.

"We now have to ensure that every move we make comes after keeping in view the fact that no one's employment is affected [...] coronavirus cases are on the rise and while we must take every decision needed to combat this situation, we have to be careful we do not throw a spanner in the works of the economy," Umar said.

He said that the government wishes to see the wheels of the economy continue to turn uninterrupted and which is why the new package was introduced.

Earlier, at the outset of his briefing, the premier regretted the high electricity costs in Pakistan owing to the expensive contracts signed by the previous governments.

"Our industries are therefore unable to compete with those that operate on 25% less expensive electricity," he said.

The prime minister said that from 2013-2018 our exports, instead of rising, took a fall. "So we decided to raise our exports. We did this because a country's growth is hinged on its exports."