The textile industry has raised alarms about the potential loss of major markets in the United States and Europe in response to the government’s consideration of imposing high wheeling charges for electricity under a new Competitive Trading Bilateral Contract Market (CTBCM) system.
Wheeling charges are fees paid for using the national grid’s transmission and distribution network, which have become a focal point of contention. The government’s plan to introduce the CTBCM system allows power producers and consumers to bypass the state-owned Central Power Purchase Agency (CPPA).
The CPPA and power distribution companies (DISCOs) have proposed wheeling charges at Rs27 per unit, a move contested by the All Pakistan Textile Mills Association (APTMA).
The APTMA, in a letter to the caretaker Finance Minister Dr Shamshad Akhtar, argued that these charges would render the CTBCM system unviable.
According to the APTMA, the proposed charges are unrealistic and absurd, potentially making exports to the USA and EU countries economically unfeasible. The association emphasized the importance of competitive wheeling charges to maintain exports and cited examples from regional economies like Bangladesh, India, and Vietnam, where charges are significantly lower.
The APTMA also highlighted the impact of previous tariff changes, noting that a tariff increase from 9 cents per unit to 14 cents per unit had led to a decline in power consumption by textile and apparel firms. This, in turn, resulted in substantial losses for the power sector.
The letter stressed the adverse effects of high tariffs, stating that they have priced export firms out of international markets, leading to decreased industrial production and electricity consumption. The APTMA’s analysis suggested that above a threshold of 12.5 cents per unit, export-oriented firms are forced towards closure, exacerbating economic challenges.
Notably, on November 22, the Power Division provided a briefing to the Cabinet Committee on Energy (CCoE), revealing that the Economic Coordination Committee (ECC) had greenlit a development plan for a competitive power market in Pakistan back on April 30, 2015.
Subsequently, a detailed design and plan for the Competitive Trading Bilateral Contracts Market (CTBCM) gained approval from the National Electric Power Regulatory Authority (NEPRA). This endorsement was further affirmed by the CCoE and the Cabinet.
The CTBCM design features and plan also received validation from the Council of Common Interests (CCI) as part of the National Electricity Policy 2021. The comprehensive National Electricity Plan for 2023 secured approval on August 9, 2023.
