The Ministry of Finance has stepped in to address growing concerns from the business community, particularly the textile industry, regarding the grid transition levy and retrospective RLNG (Re-gasified Liquefied Natural Gas) charges. Minister of State for Finance and Railways, Bilal Azhar Kayani, has called on the Petroleum Division and the Oil and Gas Regulatory Authority (Ogra) to resolve these critical issues that are significantly impacting industrial operations.
The issues were raised in a meeting with a delegation from the business community, which was convened under the Special Investment Facilitation Council (SIFC). The business representatives, including leaders from the All Pakistan Textile Mills Association (APTMA) and the Karachi Chamber of Commerce and Industry (KCCI), voiced their concerns over the grid transition levy and its adverse effects on industrial efficiency.
One of the primary concerns is the grid transition levy, which has been seen as disproportionately affecting high-efficiency Combined Heat and Power (CHP) plants. These plants, which are capable of achieving efficiency levels between 60-80 percent by utilizing waste heat, are being penalized under the current levy structure. According to industry leaders, the levy’s impact could severely hinder the sustainability of these energy-efficient plants, which are crucial for reducing overall industrial energy consumption.
To address these concerns, the business community has called for the reclassification of CHP plants within the industrial gas tariff category, with a benchmark of 60 percent efficiency and subject to annual third-party audits. This proposal is designed to ensure that high-efficiency plants are not unfairly burdened by the grid transition levy while promoting greater energy efficiency in industrial operations.
Another point of contention is the retrospective RLNG charges, which have become a financial challenge for industries. The business community claims that the charges, amounting to around Rs 75 billion, are being added to electricity bills. Since these charges are being applied retroactively, industries are facing difficulties as their financial books for the relevant period have already been closed.
Despite legal challenges to the retrospective RLNG charges, businesses report that bills have already been issued, and the issue remains unresolved. In response, the SIFC delegation has requested that, pending the court’s final decision on the matter, relaxation in deferring these charges be provided to the affected industries. This move aims to provide some relief to industries already grappling with high operational costs.
Further complicating the situation, the business delegation highlighted that sales tax is being charged separately on the captive levy, adding to the financial strain on businesses. The Power Division has been tasked with reviewing the issue and providing a clarification to the SIFC and the Office of Minister of State for Finance & Railways by November 14. The delegation has also raised concerns over the discriminatory deployment of Federal Board of Revenue (FBR) officials under Section 40B of the Sales Tax Act, which has targeted certain factories, a move they say undermines fairness in business practices.
In the meeting, Minister of State for Finance Bilal Azhar Kayani instructed that the complaints regarding Section 40B raised by the Multan Chamber of Commerce and Industry (CCI) be addressed in the next meeting of the Committee. Additionally, the issue of the waiver on electronics imports under the trade agreement with Iran, which is set to expire in 45 days, was discussed. The Quetta Chamber of Commerce and Industry (QCCI) has requested that the validity of the waiver be extended for one year, which will help streamline cross-border trade and benefit businesses in the region.
In conclusion, the textile industry, along with other sectors, is facing mounting challenges due to rising energy costs and retrospective charges. The government has been urged to take swift action to address these issues to ensure the sustainability of key industries that contribute significantly to Pakistan’s economy. Both the Petroleum Division and Ogra have been asked to present updates on resolving these concerns, with the hope of reaching a fair and balanced solution that promotes industrial growth without imposing undue financial burdens.
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