ISLAMABAD: Prime Minister Shahbaz Sharif directed the relevant ministries to hold relevant stakeholder meetings to consult on the revision of the cotton seed subsidy price, finalization of the Weighted Average Cost of Gas (WACOG) mechanism and the processing of requests for extension of load (EoL) and new electricity connections.
The Prime Minister’s Office (PMO) issued these directives to the Ministry of National Food Security and Research, Department of Petroleum, Department of Energy and Department of Commerce, in response to a letter written by the Pakistan Textile Mills Association (APTMA).
The PMO also advised APTMA to contact the National Tariff Commission (NTC) regarding their complaint against anti-dumping duties on polyester staple fibres, under prevailing rules/policy.
It also directed the Project Management Office (PMO) to conduct consultations with relevant stakeholders to examine the Department of Energy’s proposals for disbursing support to export-oriented sectors.
APTMA, in its letter to the Prime Minister, shared its proposals to support and accelerate textile exports.
On the proposal of APTMA regarding the announcement of cotton support price of Rs. The Department of National Food Security and Research stated that the 2021-22 Intervention Price Policy, although approved in late August in the season, has led to better crop management by farmers and improved production despite a decrease in acreage under cultivation compared to last year.
Instead of this result, the government approved the intervention price policy before the start of the sowing season (March) to influence the farmers’ decision regarding cotton cultivation.
The ministry says that the already approved intervention price is under review with government approval to attract more farmers towards cotton cultivation.
The value-added textile sector resents the policy of raising interest rates
On APTMA’s proposal to announce a cotton subsidy price of Rs 8000 per maon of Phutti for the upcoming season, the Ministry of Commerce commented that in order to revive cotton production, the Ministry of National Food Security and Research (MNFSR) has submitted a summary to the ECC on the Cotton seed at Rs. 5,700/40 kg, the intervention price of cotton seed is called at a discount of 10 per cent of the import parity price estimated using Cotlook A-Index when domestic prices fall below this limit and a cash credit line is provided to the Trading Corporation of Pakistan ( TCP) to buy two million bales at the price of the intervention. The European Coordination Committee of the Council of Ministers approved the summary submitted by the MNFSR on 17 March 2022 and the Council of Ministers endorsed the decision on 17 March 2022.
To revive domestic cotton production, the Commerce Department supported the DHS’s proposal to set an intervention price; However, the Ministry of Agriculture emphasized that the best option to encourage sowing of cotton crops and enhance yields is to provide high quality seeds and direct support mechanism to farmers or fertilizers and pesticides rather than purchasing from the ginning industry by TCP.
The Ministry of Commerce did not support APTMA’s proposal to set the intervention price at Rs. 8000 per piece as it has nothing to do with the cost of production calculated by API (MNISR) and has no rationale.
Commenting on the APTMA’s proposal that duties on PSF could be revised and anti-dumping duties abolished to enable Pakistan’s export products to compete internationally, the Ministry of Commerce stated that customs duties and anti-dumping duties on PSF are subject to domestic protection and the international regulatory framework.
The Transitional National Council is the Palestinian government’s independent investigative body on trade and tariff matters including domestic protection and anti-dumping. APTMA may be advised to submit its application/reference with supporting evidence to NTC for investigation in accordance with established rules/regulations and procedures.
The Ministry of Commerce has confirmed that in accordance with the Textiles and Apparel Policy, 2020-25 approved by the ECC on February 9, 2022, power (electricity and RLNG) will be provided to the export-oriented sectors of the textile and apparel industry at regionally competitive prices throughout the policy years.
For the 2020-2021 fiscal year, electricity is provided at 9 cents per unit and RLNG at $6.5 per million British thermal units on par with regional competitors. During the coming policy years, a regional competitive power tariff will be introduced for export-oriented sectors in accordance with the strategic intervention approved under Section 2.2.2 of the Textiles and Apparel Policy 2020-25.
On new connections, the power department stated that M/s APTMA may provide a list of pending states for new connections.
Commenting on the regionally competitive electricity tariff of 7.5 cents/kWh across the entire value chain, the Energy Division said that instead of providing affordable electricity to export-oriented sectors, subsidies should be disbursed to export-oriented sectors, based on export receipts as verified by FBR, rather than It is linked to the zero rating status.
Accordingly, industrial consumers subject to zero assessment may be billed at the price declared by the Government of Pakistan and the Ministry of Commerce/Textile Industry shall manage the subsidy based on the following principles: (i) The Ministry of Commerce/Textile Industry may set the subsidy price based on the analysis of actual electricity expenses per export receipt in dollars at the HS code level, for all zero-rating categories of exports; (2) Support rules can be updated against HS codes in the WEBOC system; (3) Upon receipt of export proceeds, a support claim for exporters based on WEBOC accounts may be processed in the same pattern as the Chargeback Scheme (DDT/DLTL).
On the issue of gas/LNG priority, the Petroleum Division stated that there was no significant change in the order of priorities in the winter except that the fertilizer sector was ranked second, on par with the energy sector for the spring season taking into account food security concerns. from the country. Moreover, on the recommendation of the Ministry of Commerce, a list of the 50 best gas export units was supplied uninterrupted, considering their importance as an export alternative.
No change in priority was made to prioritize the non-export sector over zero-rated industry. New connections and optimization of the load on the RLNG are allowed. However, in order to promote efficient use of a natural resource, the supply of gas for captive energy was prohibited and only gas supply for cogeneration was allowed. The Petroleum Division is prepared to supply Liquefied Natural Gas (RLNG) at a concessional tariff of US$6.5/MMBtu subject to the provision of support by the Finance Division.
In order to implement WACOG, the OGRA Act has been amended. At present, the Petroleum Department is considering various options to create a practical application for WACOG. Upon completion of this order, necessary advice and instructions will be issued to OGRA and Sui companies.
Copyright Business Recorder, 2022
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