Latest news with #Aptma
Business Recorder
17-05-2025
- Business
- Business Recorder
Ready to help build robust framework: APTMA questions Nepra's tariff-setting capacity
ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has questioned the capacity of National Electric Power Regulatory Authority (Nepra) to formulate power tariffs and offered to assist in developing a framework that is technically robust, economically just, and strategically aligned with Pakistan's development objectives. The intervention comes at a time when Nepra is reviewing the assumptions submitted by the Power Division and the Central Power Purchasing Agency-Guaranteed (CPPA-G) for finalizing the Power Purchase Price (PPP) for FY 2025–26. Aptma's letter to Nepra was issued amid widespread criticism from the business community, which contends that the assumptions behind the proposed tariffs are disconnected from economic realities. The letter highlights several overlooked market dynamics that directly affect the credibility and sustainability of the proposed PPP forecasts. Peak-hour power tariff: APTMA urges govt to share constraint details Key issues raised include the shift from captive power to the national grid, a significant reduction in grid demand due to the rise in behind-the-meter and rooftop solar photovoltaic (PV) systems, unrealistic international fuel price projections, and systemic inefficiencies. Aptma specifically criticized CPPA-G's projected electricity demand growth of 2.8% to 5% for FY 2025–26, calling it disconnected from sectoral realities. According to Aptma, the rapid uptake of solar PV—driven by high grid tariffs, load shedding, declining installation costs, and the competitive Levelized Cost of Energy (LCoE)—has fundamentally altered demand patterns. In 2024 alone, over 17 GW of solar PV modules were imported, with approximately 15 GW now operational and generating an estimated 21.9 TWh annually—equivalent to 14% of national electricity consumption. Despite this major development, CPPA-G's model makes no reference to solar net metering or the impact of rooftop PV generation. 'Load dips during peak solar hours and reverse power flows have become common across DISCOs, yet the PPP model remains static and fails to reflect this systemic disruption,' Aptma stated. The association warned that ignoring BTM generation could lead to miscalculating idle capacity costs and accelerating grid defection. Aptma also flagged concerns over the inequitable industrial tariff structure. It argued that high-voltage consumers—who maintain their own infrastructure and cause minimal technical losses—are charged higher per-unit rates than lower-voltage users (B2 category), in violation of cost-of-service principles under Section 31(2)(f) of the NEPRA Act. This pricing mismatch, Aptma noted, is incentivizing industries to split their loads into multiple low-voltage connections to escape punitive tariffs. The result is distorted demand patterns, inflated low-tension (LT) losses, and poor forecasting accuracy—contrary to Competitive Trading Bilateral Contract Market (CTBCM) principles. APTMA criticized the application of fixed charges based on 25% of sanctioned load or actual Maximum Demand Indicator (MDI), whichever is higher. This approach can inflate effective tariffs by Rs. 5–13/kWh for underutilized industries. It recommended aligning fixed charges with actual recorded demand and called on NEPRA to standardize the treatment of MDI-based charges to enhance transparency and competitiveness. Fuel price assumptions were also deemed outdated. CPPA-G based its model on a Brent crude price of $72–74 per barrel. In contrast, Goldman Sachs and JPMorgan have projected price of $56–$66 per barrel for 2025–26, citing weaker global demand and increased OPEC+ supply. Aptma recommended using $60 as a central assumption, with a downside scenario of $56, aligned with data from Platts and Argus. The letter further criticized the lack of transparency in the modeling of the Capacity Purchase Price (CPP), which forms the bulk of the PPP—ranging from Rs. 16.04 to Rs. 16.80/kWh. CPPA-G's reporting aggregates CPP data, without providing plant-wise or technology-specific utilization rates. Aptma emphasized the need for generator-wise CPP disclosures and the implementation of performance benchmarks to ensure value-based payments. Another significant omission highlighted was the role of captive power generation. Due to high tariffs and the imposition of a Grid Transition Levy, captive users now face an effective gas price of $15.38/MMBTU, despite indigenous wellhead gas being priced at $4/MMBTU. This pricing regime has rendered captive plants economically unviable, leading to a 225 MMCFD drop in captive gas offtake and an RLNG surplus of 450 MMCFD—equivalent to 54 LNG cargoes annually. APTMA stated that 92,594 BBTU of high-cost RLNG (about 31 cargoes) has been diverted to residential users, incurring a cost of Rs. 299.9 billion at an average cross-subsidy rate of Rs. 3,239/MMBTU. This diversion significantly contributed to the increase in SNGPL's Estimated Revenue Requirement (ERR), which jumped by Rs. 707.37/MMBTU for FY 2025–26. The Association lamented the absence of integrated energy planning, which has led to structural inefficiencies across the energy value chain. Key decisions in the power and gas sectors are being made in silos, resulting in mismatches between RLNG procurement and actual demand, underutilized thermal capacity, and unsustainable cross-subsidies. APTMA stressed that the existing approach is financially unsustainable and could trigger a broader liquidity crisis in both public and private energy institutions. It urged NEPRA to require CPPA-G to adopt an integrated, unified energy planning framework that aligns demand forecasts, capacity procurement, and fuel supply strategies with real-world consumption and policy realities. Wrapping up the letter, Aptma called on Nepra to adopt a forward-looking, data-driven approach that reflects Pakistan's evolving energy landscape. The current CPPA-G models, while procedurally compliant, fail to account for major behavioral, technological, and structural shifts affecting electricity demand, fuel economics, and cost recovery. Addressing these gaps through integrated planning, transparent cost disclosures, and realistic demand forecasting is critical to ensuring industrial competitiveness, equitable tariff allocation, and the financial viability of Pakistan's energy sector. Aptma reaffirmed its readiness to collaborate with Nepra to develop a tariff framework that is both technically sound and aligned with the nation's broader economic goals. Copyright Business Recorder, 2025
Express Tribune
27-04-2025
- Business
- Express Tribune
Reforming taxation for salaried class
Talking to members of the All Pakistan Textile Mills Association (Aptma) on Monday, the ombudsman said that tax revenue collection could be increased 'only through a fair, just, easy and efficient tax system'. PHOTO: FILE Listen to article The tax system in Pakistan is constitutionally required to be fair, just and equitable. However, a review of the current system reveals a concerning trend: those who are tax compliant are increasingly burdened, while those who avoid the tax net, often by conducting transactions outside the banking system, face little to no consequences. The salaried class exemplifies this disparity. Despite being among the most tax-compliant segments, regularly filing returns and having taxes withheld at source by employers, they frequently face increased tax rates and the erosion or elimination of available tax benefits. This unjust treatment is often justified by the government's inability to collect adequate revenue from other sectors due to weak enforcement or political constraints. As a result, the salaried class becomes the default target for higher taxation. While this may offer short-term relief in revenue collection, it undermines long-term objectives and fuels a culture that incentivises staying outside the tax net. With the federal budget due within a month, this is an opportune moment to advocate for reforms that support the salaried class, drawing inspiration from international best practices. It's worth noting that the government has projected a 55% increase in revenue collection from the salaried class for the current fiscal year compared to the previous year's collection of Rs368 billion. This increased reliance on the salaried segment will make it more challenging to introduce equitable and supportive tax measures. However, these challenges can be overcome with political will, sound policy design and robust enforcement. It is concerning that tax laws are often amended under pressure from external lenders, yet domestic reforms that promote fairness across all income groups are rarely prioritised. First and foremost, the tax rates applicable to the salaried class must be revisited. The current tax-free threshold should be raised from Rs0.6 million to Rs1.2 million per annum. Moreover, Pakistan rarely indexes its tax brackets to inflation, a globally accepted practice that prevents fiscal drag or bracket creep. Indexing ensures that rising nominal incomes due to inflation do not result in higher effective tax burdens, especially for low and middle-income earners. Far too often, modest salary increments are negated by disproportionate increases in tax liabilities. Another issue that lies with tax rates of salaried class includes that if a person's annual salary exceeds Rs4.1 million, a flat 35% tax rate applies, down from a previous threshold of Rs6 million, creating a steep cliff effect. There is a clear need to introduce additional tax slabs to avoid such abrupt increases. Additionally, inconsistencies between income slabs also merit attention. A salary increase from Rs2.2 million to Rs3.2 million results in a marginal tax rate hike of 5.26%, whereas an increase from Rs3.2 million to Rs4.1 million leads to a lesser rise of 3.64%. Such disparities disproportionately impact middle-income earners and highlight the need for comprehensive slab rationalisation. Unfortunately, Pakistan tends to emulate other countries' tax rate structures without adopting the corresponding tax benefits those countries offer. A recent example is the additional surcharge introduced via the Finance Act 2024, under Section 4AB of the Income Tax Ordinance 2001 (the Ordinance), applicable where the taxable income exceeds Rs10 million. This surcharge is levied even on individuals, including salaried persons and associations of persons (AOPs), and must be reconsidered or withdrawn. A holistic view reveals that the effective tax rate on salaried individuals often exceeds that paid by small business owners, especially those operating informally or under the minimum tax regime based on turnover. Salaried taxpayers are not allowed to deduct any personal expenses from their income. A standard deduction, offered in many countries, including India, should be introduced. India currently allows a standard deduction of INR 50,000 under the old tax regime and INR 75,000 under the new regime. Pakistan could implement a similar deduction without requiring any supporting evidence to cover the basic costs of employment, such as transportation and meals. This deduction could vary depending on the taxpayer's circumstances, with higher deductions for senior citizens, disabled persons, teachers, etc. Lawmakers in Pakistan could also consider introducing dual tax regimes for salaried individuals. One regime could offer lower tax rates but limit deductions to a standard deduction and a few basic tax credits. The other could allow a broader range of deductions and credits in exchange for slightly higher rates. Taxpayers should be given the option to choose the regime that suits them best. Other commonly available deductions internationally for salaried class include those for house rent, mortgage interest, life and health insurance premiums and expenses related to supporting dependents with disabilities or chronic illnesses. These costs significantly reduce their disposable income and should be deductible under a fair tax system. Pakistan currently allows a limited deduction for children's education expenses, but thresholds are too low to be meaningful. These limits should be substantially increased and eligibility should be extended to include the taxpayer's own education and that of other dependents. Additional incentives could include offering tax credits or benefits to salaried individuals who consistently file their returns on time. The ordinance contains multiple penalties for non-compliance, but very few rewards for voluntary and timely compliance. A simple tax credit could be granted in the next fiscal year for taxpayers who filed on time during the preceding year. Since most salaried tax is collected through withholding, this measure would not significantly impact revenue but would encourage compliance. Furthermore, the government could exempt compliant salaried individuals from audits and assessments, except in high-net-worth cases or where specific risk factors are identified. The language of Section 149 of the ordinance should be clarified to clearly outline which claims are permissible when tax is withheld by an employer. In cases where a salaried person receives refund in a prior year, the refund should either be allowed under Section 149 of the ordinance or processed automatically through a streamlined verification mechanism. Many additional reforms could help make the taxation of salaried individuals more just, efficient and supportive of broader economic goals. This segment is among the most documented and compliant in the country, yet it continues to bear a disproportionate tax burden due to weak enforcement in other parts of the economy. It is time to prioritise fairness and equity in tax system not just in principle, but in practice. The writer is a member of the Institute of Chartered Accountants of Pakistan
Business Recorder
27-04-2025
- Business
- Business Recorder
Peak-hour power tariff: APTMA urges govt to share constraint details
ISLAMABAD: The All Pakistan Textile Mills Association (Aptma) has requested the government to share details of the constraints preventing the removal of the peak-hour electricity tariff for the industrial sector. In a letter addressed to Prime Minister Shehbaz Sharif, Aptma Secretary General Shahid Sattar stated that, despite some progress, the prevailing electricity tariff of 10–11 cents/kWh remains above the regionally competitive benchmark of 9 cents/kWh. Competing economies offer electricity at 5–9 cents/kWh, putting Pakistan's energy-intensive textile sector at a disadvantage. The high cost of energy continues to hinder export competitiveness and manufacturing growth, he noted. Grid Transition Levy: APTMA urges PD to address inaccuracies 'A further reduction in industrial power tariffs can be achieved by abolishing the Time of Use (ToU) power tariff structure for industrial consumers,' Sattar adding, 'This would be revenue-neutral, as industry is projected to consume about 32% more electricity during current peak hours, according to Nepra data, thereby offsetting revenue losses from the higher ToU tariff.' According to Aptma's assessment, this adjustment would reduce the effective weighted average tariff for industrial consumers from Rs29.48/kWh (10.57 cents/kWh) to Rs28.36/kWh (10.16 cents/kWh)—a reduction of Rs1.12/kWh. Increased electricity consumption would improve grid utilization and reduce stranded capacity, potentially lowering the average power purchase price by an additional Rs0.14/kWh. This reduction could be passed on to consumers through Quarterly Tariff Adjustments (QTA). 'The ToU structure is an outdated mechanism, introduced when Pakistan faced acute power shortages and needed to discourage peak-hour consumption,' the Association argued. 'However, with surplus generation capacity today and stranded capacity contributing to high tariffs, the continued application of ToU pricing is counterproductive.' Aptma emphasized the need to replace the ToU structure with a uniform tariff at the off-peak rate, to promote maximum power usage, improve grid efficiency, lower per-unit costs, and enhance industrial competitiveness. The Association called on the government to eliminate the ToU structure for industrial consumers and implement a uniform AS-II tariff based on the current off-peak rate. In a recent communication with the Power Division, Aptma noted that its team met with senior officials on April 18, 2025, to discuss the issue. During the meeting, Power Division officials outlined existing challenges to removing the peak-hour tariff, citing system limitations, demand fluctuations, and fuel cost dynamics as key factors. The Power Division assured Aptma that the analysis presented, along with detailed data on real-time system demand and fuel costs, would be shared with the Association. 'We look forward to receiving this information at the earliest, so we can review it thoroughly and develop a practical proposal to reduce industrial energy costs while increasing demand on the national grid—ultimately contributing to broader economic growth,' Aptma concluded. Copyright Business Recorder, 2025
Business Recorder
27-04-2025
- Business
- Business Recorder
No cargo movement since Apr 19th: Aptma appeals to PM for highways clearance
ISLAMABAD: The All Pakistan Textile Mills Association (Aptma) has issued an urgent call for Prime Minister Shehbaz Sharif's intervention to clear highways and restore cargo movement for import and export consignments, suspended since April 19, 2025. In a press conference, Aptma Chairman Kamran Arshad stressed the gravity of the situation, revealing that more than 25,000 export containers remain stranded across Sindh, unable to reach ports due to widespread cargo disruptions. In addition, around 50,000 containers carrying imported goods, raw materials, and other essential supplies are stuck due to extensive road blockages in the province. Arshad warned that even if routes were reopened immediately, clearing the current backlog could take up to 25 days — delaying critical exports and manufacturing inputs. 'This is nothing short of a national crisis and demands urgent action,' he asserted. He emphasized that the disrupted supply chain is wreaking havoc on industrial operations, threatening export commitments, slashing production, and potentially causing economic losses running into hundreds of millions of dollars. 'This crisis is severely damaging Pakistan's credibility in international markets and poses a major threat to the economy,' Arshad said, appealing to Prime Minister Shehbaz Sharif, Sindh Chief Minister Murad Ali Shah, and PPP Chairman Bilawal Bhutto Zardari for immediate personal intervention. Arshad also highlighted structural issues with the Export Facilitation Scheme (EFS), noting a damaging imbalance: while imports continue to receive duty- and tax-free treatment, sales tax exemptions on local supplies have been withdrawn. This, he said, has critically undermined the domestic textile industry. 'The spinning industry and cotton farming are especially hard-hit,' he explained, disclosing that around 120 spinning mills—responsible for 20–25% of total yarn production—along with more than 800 ginning factories, have already shut down. Many of the remaining mills are operating at just 50% capacity and face imminent closure. 'If this continues, local cotton will find no buyers, rendering cotton farmers destitute and causing massive job losses,' he warned. Arshad further cautioned that the policy disparity is forcing exporters to rely on imported raw materials, thereby weakening domestic industries and straining rural economies. The consequences, he said, extend beyond the textile sector and threaten the livelihoods of millions. APTMA called on the government to restore the EFS to its June 30, 2024 status by reinstating zero-rating/sales tax exemptions on local supplies. Alternatively, the association suggested imposing equal taxation on imports to create a level playing field. Arshad also urged the exclusion of yarn and cloth imports under the EFS to protect local producers. Speaking at the press conference, Aptma Chairman-North Asad Shafi added that numerous export orders have been cancelled due to the logistical paralysis in Sindh. He warned that international buyers are turning to alternative suppliers, risking long-term loss of business. 'If this situation persists, Pakistan faces the real danger of deindustrialization and a significant decline in export revenues,' Shafi stated, calling for urgent remedial measures. Leading exporters—including Ahmad Shafi, Anjum Zafar, Ali Ahsan, and Ahsan Shahid—echoed these concerns. They warned that the suspension of cargo movement has already inflicted severe damage on export operations and could result in irreversible economic loss if not addressed immediately. Copyright Business Recorder, 2025
Express Tribune
12-04-2025
- Business
- Express Tribune
Textile millers demand restoration of EFS
Listen to article The All Pakistan Textile Mills Association (Aptma) has called for restoring the Export Facilitation Scheme (EFS) to protect long-term sustainability of Pakistan's textile exports and create room for negotiations with the US before the 90-day suspension of reciprocal tariffs comes to an end. "The government should immediately address the sales tax disparity between local and imported supplies for exports and create a level-playing field," Aptma Chairman Kamran Arshad said at a press conference on Friday. Pakistan Cotton Ginners Association Chairman Dr Jassu Mal and former chairman Sohail Harral also spoke. The first best solution was to restore EFS to the June 2024 position with zero rating for local supplies, they said. However, the International Monetary Fund has not accepted it. Under this scenario, according to the industry leaders, the only viable alternative is to prepare a negative list of high-risk imports under EFS, including all types of yarn and cloth. Under the FY25 budget, sales tax exemption on local supplies for exporters was removed, while imports of the same raw material and inputs were exempted from duty and sales tax. This policy shift has caused a significant disadvantage for local suppliers and is severely impacting the sustainability of the domestic industry and value chain, particularly small and medium enterprises, they said. Although 18% sales tax refund is technically available on local inputs, the refund process remains plagued with lengthy delays, partial disbursements and high administrative costs. Owing to this sales tax disparity, exporters prefer imported inputs, pushing local suppliers out of business. During FY25, imports of raw cotton, yarn and greige cloth are expected to increase by $1.6 billion whereas export growth during the same period is projected to reach $1.5 billion. Punjab offers incentives Meanwhile, the Punjab government assured Aptma of offering unprecedented incentives, which would be better than any other country, to woo Chinese investors to relocate operations to Pakistan in the wake of current tariff war. "A mechanism is being evolved to ensure no change in policy irrespective of which government comes in or goes out," Najaf Iqbal Syed, CEO of the Punjab Board of Investment and Trade (PBIT), said during a meeting with textile exporters in Lahore. He declared that the Punjab government would ensure full-scale security for the Chinese investors working in the province. He supported the idea of establishing and operating garment parks on the pattern of 'Plug and Play Model'.
