ISLAMABAD: Negotiations with 16 Independent Power Producers (IPPs) are expected to conclude by the end of January, following the termination of contracts with five IPPs, a senior Power Division official informed the Senate Standing Committee on National Food Security and Research on Wednesday. The termination of these agreements is projected to save Rs440 billion annually, with further benefits anticipated from ongoing discussions. A task force has also been established to minimize power generation costs.
During the meeting chaired by Senator Syed Hussain Tariq, Kissan Ittehad President Khalid Mehmood Khokhar raised concerns over high electricity tariffs for agriculture, which he claimed range between Rs55 and Rs60 per unit—higher than industrial rates. He demanded a reduction to make agricultural tariffs lower than industrial ones. However, Power Division officials refuted this, stating that the basic tariff for agriculture is Rs42 per unit compared to Rs47 for industry, with taxes applied uniformly across sectors.
The committee also addressed taxation issues in the cotton sector. The chairman highlighted a disparity, with an 18% sales tax imposed on locally produced cotton, while imported cotton remains tax-free, discouraging local growers.
FBR Chairman Rashid Mahmood Langrial informed the panel that the Federal Board of Revenue would consider the committee’s recommendations to tax imported yarn but would first consult the Ministry of Commerce, the Ministry of Industries, and the International Monetary Fund (IMF) before finalizing any decision. He cautioned that such a move might negatively impact exports.
According to FBR documents submitted to the committee, the current taxation mechanism ensures that local cotton suppliers are refunded input tax paid. Exempting local cotton supplies from tax could lead to enforcement challenges and increased costs, particularly under Pakistan’s IMF program, which requires concurrence for such exemptions.
The committee urged for a balanced approach to address farmer grievances while safeguarding export competitiveness and compliance with international commitments.
Story by Fazal Sher
