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Print Print 2022-09-19

Revision of tariff: Nepra rejects plea of telecom industry

  • Says 'Value Additions' used in definition of Industry for purpose of applying industrial supply tariff is used in context of value addition through manufacturing or production process
Published September 19, 2022

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has dismissed the telecom industry’s petition for revision of tariff from commercial to industrial tariff.

The Federal IT Minister & Telecom Syed Amin Ul Haque; however, has expressed his concern over Nepra’s decision regarding dismissal of petition of Telecom Companies to grant Industrial Electricity Tariff.

NEPRA Authority in their verdict wrote that “Value Additions” used in the definition of Industry for the purpose of applying industrial supply tariff is used in the context of value addition through manufacturing or production process.

In case a more broader meaning of the term “Value Addition” is assumed, a larger number of commercial activities will fall for the purpose of electricity tariff; therefore, based on this point the Authority has turned down the request of the much need for CMO’s and the petition has been dismissed.

Telecom company operators in Pakistan namely, Pakistan Telecommunication company Limited (PTCL), Telenor Pakistan, Pak Telecom Mobile Limited (PTML), Pakistan Mobile Communication Limited (PMCL), CMPAK- Zong and Deodar Private Limited are providing mobile and broadband services benefiting to 188 million subscribers of Pakistan with an annual turnover in total of over Rs. 400 billion and creating direct and indirect jobs of 25,000 people.

Telecom sector to date has brought foreign direct investment of over $10 billion and continuous to do so in shape of License renewal, Spectrum fees, etc.

Conversion of electricity tariff to industrial category: Representatives of cellular companies grilled by Nepra

In the year 2004, Telecom sector was declared as “Industry” by the Ministry of Industries and Production, GoP vide notification dated 20.04.2004, therefore, all CMO’s are entitled to benefit all the concessions available to “Industry” including Industrial tariff of electricity for its towers and exchanges but it was never granted in letter and spirit.

Moving on, in year 2014 - Thereafter vide U.O No. 2-7/2003-DT dated 18.06.2014 the Ministry of Information Technology, Government of Pakistan also endorsed the request of the Telecom Sector including Cellular Mobile Operators to be classified as an “Industrial Undertaking” under clause (b) of Section 2 (29C) of the Income Tax Ordinance, 2001.

In year 2021, In line with the decision of the Federal Cabinet, Government of Pakistan endorsed that all telecommunication companies operating under the license of Pakistan Telecommunication Authority (PTA) have been specifically included in the definition of an “industrial Undertaking” by addition of clause (c) to section 2 (29C) of the Income Tax Ordinance, 2001 through the Finance Act, 2021.

Cellular Mobile Operators (CMO’s) have filed multiple inventions with NEPRA who was in the process of determining Uniform Tariff of DISCO’s throughout Pakistan to persuade the authority in this behalf. However, it was not entertained.

CMO’s again filed a separate tariff petition with the Authority on the merit that Telecom sector falls under their Authority definition of creating value additions to the industry and it was argued that sectors of sectors are now benefiting with the connectivity that Telecom sector has brought for the businesses.

On the contrary, NEPRA in their verdict wrote that “Value Additions” used in the definition of Industry for the purpose of applying industrial supply tariff is used in the context of value addition through manufacturing or production process.

In case a more broader meaning of the term “Value Addition” is assumed, a larger number of commercial activities will fall for the purpose of electricity tariff therefore based on this point the Authority has turned down the request of the much need respite for CMO’s and the petition has been dismissed.

Federal IT Minister & Telecom Syed Amin Ul Haque said in that the Telecom Sector has been given the status of an industry by the Government of Pakistan and we believe that it is the right of Telecom companies to get electricity tariff at industrial rates.

When we talk about foreign investment and its extension, giving maximum incentives to companies working in Pakistan will also encourage other international investors, he said.

“This matter is not only for the Telecom Sector but it can be an important step towards providing better facilities to the consumer and attracting future foreign investors.”

Amin said it has always been our endeavour to handle the affairs of both the Public and the Stakeholders related to IT & Telecom sector in an amicable manner so that the process of construction and development can be accelerated.

Copyright Business Recorder, 2022

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Retired Sep 19, 2022 09:49am
Government is trying to squeeze every sector of economy to meet expenses! How long will this continue? Soon it will be unfeasible to do business in this country!
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