LAHORE: As the government has increased electricity tariff by almost Rs5, taking base tariff up to Rs 29.78 under the IMF condition, the Businessmen Panel (BMP) of the FPCCI has condemned the move, stating the burden of power theft, mismanagement, and inefficiencies should not be shifted to the trade and industry consumers, as it would prove to be dangerous for overall economy.
FPCCI former president and BMP Chairman Mian Anjum Nisar said that in 2022, the previous government raised base tariff by almost Rs8 per unit in three phases due to which base tariff jumped to around Rs25 per unit from Rs17 per unit. After the IMF Board approval of the US 3 billion stand-by arrangement, it asked the Pakistan authorities urgently need to strengthen energy sector viability by aligning tariffs with costs, reforming the sectors cost base, and better-targeting power subsidies.
Anjum Nisar said that Pakistan’s industry had been harmed by the high cost of doing business, which discouraged investment in capacity and capability and called for easing the burden of heavy taxes on the power sector.
He said that the high cost of doing business has proved to be dangerous for Pakistan’s industry, discouraging investment both in capacity and capability, calling for lessening the burden of heavy taxes on the power sector.
While describing the government’s decision to increase electricity tariffs by Rs5 per unit as a shameful decision, he urged the government to reverse the increase. The government’s decision to increase the electricity tariff is anti-industry, and the BMP strongly condemns the government’s decision and calls on it to rescind it. He urged the power ministry to identify system constraints and communicate targets to all concerned departments in order to launch a wartime effort to upgrade the transmission system.
He said that the government is ignoring the fact that the gap between the generation and consumer cost is chiefly because of power theft and inefficiency of the heads of power distribution companies who are well protected by their political masters. It is a disastrous decision, which will encourage electricity theft. He said that the increase should have been linked with a reduction in line losses. He said that the government should give a target to all electricity distribution companies to reduce their line losses by 3 to 5 percentage points or their heads should be sacked. The line losses in case of five distribution companies are as high as 40 per cent. One per cent line loss means Rs 6 billion in lost revenue. The governments give a target to all companies to reduce the losses by two percentage points.
The BMP Chairman observed that the government’s inability, ill planning and financial woes had multiplied the miseries of businesses which were facing unscheduled power outages across the country. At the same time, they were already paying heavy electricity bills of up to Rs50 per unit, including surcharges and other taxes, he added.
He said all the major industrial cities of the country were facing unannounced electricity load shedding and stressed the need to rectify technical faults immediately.
Anjum Nisar said that the high cost of doing business has proved to be dangerous for Pakistan’s industry, discouraging investment both in capacity and capability, calling for lessening the burden of heavy taxes on the power sector. He urged the government to shut down all costly oil-fired power plants in order to ensure consumers had access to cheaper energy. He lamented that the previous administration did not prioritize the rehabilitation and maintenance of older power plants, resulting in multiple system constraints and significant losses.
He argued that underutilization of efficient power plants due to RLNG scarcity could be avoided if the Ministry of Energy assesses and manages RLNG availability in a timely manner. He urged the Ministry to take a proactive role in ensuring the timely supply of RLNG, so as not to disrupt the operation of the efficient power plants. Thus, he added, the power sector’s inefficiencies could be mitigated without passing them on to end consumers.
Anjum Nisar stated that the constant increase in power tariffs had increased electricity prices and added to the already high cost of trade and industry. Seeking comparable energy tariffs for domestic industries in order to capture the global market, he stated that due to high electricity rates, power theft became rampant as the tariff was unaffordable to consumers.
He urged the completion of all ongoing power projects well ahead of schedule. He stated that while hydel power production had increased, the price of furnace oil had been steadily declining on international markets. He stated that business-friendly policies must be adopted, similar to those adopted by other neighboring countries in the region.
Copyright Business Recorder, 2023
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