Patron-in-Chief of the United Business Group (UBG), SM Tanveer, has called on Federal Finance Minister Senator Muhammad Aurangzeb to reduce electricity rates to 9 cents per kilowatt-hour and to cut interest rates by up to 15%. He emphasized that these measures are crucial for boosting exports, investment, and employment, enhancing the national economy.
Meeting with Federal Finance Minister
During a visit to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), S.M. Tanveer discussed these demands with the Finance Minister. Acting FPCCI President Saqib Fayyaz Magoon, former caretaker Federal Minister for Commerce, Industry, Investment and Interior Dr. Gohar Ejaz, and Chairman of the National Economic Think Tank, Zaki Ejaz, were also present. Tanveer stressed that the business community can only generate tax revenue if they can earn it, highlighting the importance of a conducive environment for industry and trade.
Economic Rationale
Tanveer noted that inflation has already decreased to 12%, making the current 20.5% interest rate unjustifiable. He argued that providing electricity at 9 cents per kilowatt-hour to the industry would boost exports by $6 billion. To address the additional demand of over 300 megawatts on the grid, he suggested reallocating Rs 240 billion from the Public Sector Development Programme (PSDP) to meet this need.
Challenges Faced by Export Industries
Tanveer informed the Finance Minister that the business community cannot secure international orders because the government charges excessive rates under cross-subsidy. He questioned why international buyers prefer Pakistan over countries like Vietnam and Bangladesh, which offer cheaper energy. He warned that the export industry is declining, and Pakistan is rapidly losing market share due to the high electricity rates compared to competitive countries.
Impact on Export Capacity
He highlighted that the country’s export capacity of $600 million per month is not being utilized, even as exports rapidly increased. Increasing exports is the only solution to meet the annual external financing needs, balance of payment issues, and job creation. Tanveer expressed concern that with the current energy prices, 60-70% of industries could shut down. Especially with the recent significant increase in natural gas prices.
Call for Competitive Energy Tariffs
S.M. Tanveer emphasized that non-competitive energy tariffs hinder export growth and investment in the export sector. Following the federal budget announcement, all 228 chambers and trade associations across the country are in a state of fear. He mentioned that UBG had envisioned achieving $100 billion in exports by 2030 when they took control of FPCCI. But lamented that the current budget has significantly dampened their enthusiasm for this goal.
