KARACHI: The Pakistan Business Forum (PBF), flaying the huge jump in electricity as well as gas prices to meet the IMF condition, has said the mini budget would unleash a new wave of high inflation, further increasing the cost of doing business, making Pakistani exports uncompetitive in the international markets.
PBF President Mian Usman Zulfiqar said that the already decline of 34 rupees in the value of local currency against dollar and 35 rupees hike in the prices of petroleum would create a ripple effect as it would badly squeeze the purchasing power, reduce growth of business activities making it more difficult to revive the dwindling economy.
He observed that it is unfortunate that the government has approved the passing of around Rs240 billion additional burdens on consumers through a direct tariff increase and an indirect increase through the withdrawal of subsidies given to exporters and farmers.
He said that the government liquidity and external vulnerability risks are elevated and there remain considerable risks around its ability to secure required financing to fully meet its needs for the next few years.
PBF President also said that constant hike in power tariff has pushed the electricity prices higher and added to the already soaring cost of trade and industry. He asked the government to shut down all expensive oil-based power plants to ensure availability of cheaper energy for consumers.
Usman Zulfiqar condemned the government for shifting power distribution companies’ inefficiencies’ burden to the consumers by jacking up the tariff under the guise of Fuel Charges Adjustment, as the ECC has also given the go-ahead to the recovery of pending fuel cost adjustment from consumers to collect Rs68 billion.
According to reports, the ECC has approved the withdrawal of electricity subsidies for farmers to save Rs14 billion in four months. The effective increase for the farmers will be around Rs3.30 per unit but they will still be paying subsidized rates.
The ECC has also approved the imposition of three separate quarterly surcharges in the range of Rs0.69 to Rs3.21 per unit. Industrial consumers will also be impacted by the debt surcharge of Rs3.39 per unit, which pushes the total increase for them to Rs15.52 per unit. The industrial tariff will now go up to Rs36 per unit.
Moreover, there will be an additional increase of Rs3.62 per unit in the cost of electricity on account of quarterly surcharge to collect Rs73 billion, excluding the impact of the pending fuel cost adjustments.
The government has also imposed a debt servicing surcharge of Rs3.39 per unit, taking the net additional increase to Rs7 per unit for the domestic consumers.
These consumers are already paying a cost of up to Rs32.7 per unit, excluding taxes.
The government approved the withdrawal of electricity subsidy of Rs12.13 per unit, given to the exporters, with effect from March 2023 to pass on another burden of Rs51 billion.
Copyright Business Recorder, 2023