As protests over exorbitant power tariffs in Pakistan refuse to die down, the business community on Tuesday heavily criticised distribution companies (Discos) for not curbing line losses – one of the causes that contribute to increase in electricity rates.
Businesses also showed dismay over imposition of high capacity charges on consumers.
Pakistan’s apex trade body the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) held an emergent press conference on higher electricity tariffs. FPCCI and other association’s officials attended simultaneously from Lahore, Karachi, Islamabad, Peshawar, and Quetta via video link.
“Pakistani households and businesses are facing mounting power prices,” said Lahore based Irfan Iqbal Sheikh, President FPCCI.
“NEPRA’s latest forecast for power purchase prices for the fiscal year 2023-24 reveals a substantial financial burden, with consumers to bear 68% of costs for fixed capacity payments; primarily benefiting coal plants,” he said.
Hike in power prices has recently trigged protests across the country, with political parties and business communities joining hands with the protestors. The interim government is mired in indecisiveness as increase in electricity prices is in line with commitments made to the International Monetary Fund (IMF).
Rehan Jawed, chairman of Korangi Association of Trade and Industry’s (KATI) Nepra and Ogra committee, said the main issue is capacity charge and theft.
“Capacity charges can be overcome by increasing consumption, which can be achieved by reducing overall industrial unit price,” he told Business Recorder.
Net effect would be lower inflation, a stable round the year base-load, higher exports, and lower imports, he envisaged. “It will be a win-win situation for all.”
“From the back-end, we need to understand that power plants are on capacity charge basis and dollarised returns. RLNG is take or pay. When they are mixed together is the reason for this chaos,” he explained.
He emphasised that industrial unit price should be lowered to a point where it sets off the capacity charges.
“Let us not forget that there is a 20,000 megawatts difference in summer and winter months. Only a stable industrial load can sail us through this mess.
“None of the above proposals are difficult decisions and the IMF won’t mind either. They are only concerned when there is subsidy involved. In fact, if you read the last review report, WACOG (weighted average cost of gas) was proposed by the IMF itself.”
The KATI official urged the government to reduce the rate up to 300 units to protected consumers so they do not resort towards theft.
“If things are not addressed, 35% of the residential consumers will not be able to pay their bills. Residential consumers make 60% of the total electricity user,” he said.
Meanwhile, FPCCI chief further stated that residential consumers are unable to pay their electricity bills.
“On an average, residential and commercial consumers pay 15-20% extra in the form of uniform quarterly adjustment; fuel price adjustments and additional surcharges.