Prime Minister Imran Khan on Tuesday unveiled a major relief package of the electricity tariff for general, small and medium industries to encourage higher power consumption and manufacturing.
The premier and his team addressed the nation after a meeting of the federal cabinet which was held earlier today.
Some salient features of the new package:
- Peak hours have been removed
- Small and medium industries using additional power — as compared to their previous bills — will be provided electricity at a discount of 50pc till June 30, 2021
- For next three years, all industries will be given a discount of 25pc for using additional units as compared to their previous bills
The prime minister began his address by explaining that the cost of electricity in the country was expensive because of previous contracts signed for power generation which had adverse effects for the country.
"As soon as we assumed charge, we tried to increase exports. Why did we do that? Because wealth generation is directly related to exports."
We gave exporters incentives, the premier said. "After Covid-19, Pakistan is the only country in the subcontinent that has progressed the fastest [in terms of exports]. At the same time, Pakistan has been largely spared of the adverse effects of the pandemic, a fact that has been acknowledged internationally."
He stated that the package would not only increase exports, but would also give a boost to domestic industries.
"We have decided that from November 1, small and medium industries using additional power — as compared to their previous bills — will be provided electricity at 50 per cent of the rate till June 30, 2021."
For example, if they were buying electricity for Rs16/unit, they will now have to pay Rs8/unit for the additional power they consume, he said, adding that this will be reviewed after June 2021. "However, all industries will be provided additional power at 25pc of the rate for the next three years."
He added that there will no longer be "off-peak hours". "There will be off-peak hours all the time," he said, adding that Minister for Industries and Production Hammad Azhar would explain this in more detail.
The premier said that the coronavirus pandemic had the biggest impact on the services industry. "It is very important for us to bring industrialisation to the country. The purpose of this is wealth creation so that we can get rid of our burden of debt."
He concluded the press conference by appealing to the nation to observe standard operating procedures (SOPs) for curbing the spread of the virus.
"Please wear face masks when you leave your homes. Pakistan has been largely spared when it comes to the Covid-19 pandemic. But I appeal to you to please wear face masks during the next few months."
He added that if the country's coronavirus outbreak worsens, the government will not shut down industries. "We will only shut down those things which will not have an impact on our businesses. We will allow [industries] to operate but with SOPs."
'PTI govt has taken tough decision'
Azhar said that the premier had instructed the team to bring down the cost of production for industries to keep the economy running while also generating employment opportunities.
Commenting on the package announced by the government, he said: "This was a tough decision by the PTI government that has been approved by the federal cabinet.
"Firstly, off peak hours will continue for 24 hours, there will be no peak hours. In the past, what happened was that peak hours — between 7pm and 11pm — the electricity rate would increase by 25pc for industries. And this had been happening for many years," he said.
"Then, industries with B-1, B-2 and B-3 connections will be given a discount of 50pc on additional electricity till June. Thirdly, all industries [...] will be given a discount of 25pc for the next three years on additional power consumed."
He added that Pakistan's economy was growing despite a global recession. "Many industries are picking up pace but are unable to fulfill their orders. So this package was important to increase their production in order to bring down their costs and keep them running during peak hours.
"Our industry will become more competitive on an international and local level which will also have an impact on prices," he said.
'PM gave clear instructions'
Minister for Planning and Development Asad Umar said that the premier had given clear instructions to take all those steps to foster and encourage economic activity in the country.
"In the past few months, major decisions have been taken for the energy sector which have allowed the government to announce this package," he said. "I cannot recall another government announcing electricity rates for the next three years."
The second thing which made this possible was the manner in which the country handled the pandemic, under the premier's vision, which prioritised people's welfare and the economy, he said.
"Pakistan decided to open up the economy earlier. We opted for a 'smart lockdown' and saw a decrease in cases and fatalities while also managing to resuscitate the economy." He added that steps need to be taken to ensure the safety of people's incomes.
"We are seeing that the coronavirus is rearing its head again. We have to take all those steps which allow us to curb the spread of the virus while ensuring that people's incomes are not affected," he said.
"We want the wheel of economy to keep running," he said, adding that he hoped businessmen would take the message seriously.
'Economy stable due to govt's steps'
Adviser to the Prime Minister on Finance and Revenue Abdul Hafeez Sheikh said that Pakistan's economy was stable due to the steps taken by the government which included cutting down on its own expenses and ramping up tax collection efforts.
"The result of these decisions was that our primary balance became positive," he said. He added that another problem the PTI government encountered when it took over was declining exports.
"We made the decision that we have to industrialise Pakistan and major steps were taken for that," he said, adding that these were also lauded by the World Bank.
He also highlighted some of the economic indicators that were positive. "Tax collection and remittances in the first four months [of the new fiscal year] are up while exports are increasing. Also the current account and primary account surplus is increasing.
"In the past four months, there has not been any increase in our debts," he said.