Cross-subsidy move will increase the business cost of the textile sector: Mian Zahid Hussain

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Chairman of FPCCI Advisory Board and National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain said on Monday that OGRA and the Ministry of Energy should not take controversial decisions that will harm one sector while benefiting another.

He said that the decision taken to give cross-subsidy to the fertilizer sector in the heat of the budget should be withdrawn as it will have disastrous effects on employment and the economy.

Talking to the business community, the veteran business leader said important government institutions should avoid such disastrous decisions.

Mian Zahid Hussain said that textiles are the most important sector of the country’s economy, providing the most foreign exchange and employment after agriculture.

The textile industry contributes around 65% of our national exports, 46% of industrial production, 38% of industrial employment, and 9% of the Gross National Product.

The textile value chain consists of multiple industrial sub-sectors. The value chain is quite long, from cotton picking to a finished garment of the latest fashion. The end product of one sub-sector is the raw material for the other. Each sub-sector in the value chain contributes to value addition and employment generation.

Therefore, the decision to cross-subsidy the fertilizer sector at the cost of the textile sector should be reversed.

The business leader said that the decision to extend the subsidy to the fertilizer sector had been made at a time when the industrial sector is forced to buy the most expensive electricity in the region, gas prices are skyrocketing, and interest rates are ruining the business.

Illegal imposition of Rs 50 billion cross-subsidies to the fertilizer sector, including the accrued differential of Rs27 billion from November 2023 through March 2024 and the monthly differential of Rs3.8 billion from April 2024 through September 2024 — in ring-fenced RLNG tariffs from June 2024 onward will have a destructive impact on the economy.

He said the decision violates Articles 6 and 7 of the Ogra Ordinance 2002, designed to protect consumer interests and minimize economic distortions.

Additionally, the government, with the permission of the Petroleum Product (Petroleum Levy) Ordinance of 1961 and the Petroleum Products (Petroleum Levy) Rules of 1967, has assigned Ogra the responsibility of determining the price of RLNG.

The government, via ECC decisions on June 6, 2015, and June 14, 2016, has also identified pricing components and parameters of RLNG to Ogra through the DG Gas office, effectively ring-fencing RLNG prices and ensuring no additional or undue charges are made to consumers, he observed.

Mian Zahid Hussain further said that the government should ensure that no additional or unnecessary charges are to be taken from the consumers, but this is not happening.

Important government institutions should bring stability through justice in all sectors of the economy. Otherwise, there will be instability among the main pillars of the economy, which is outside everyone’s interest.

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