Tax refund claims of power companies rise to Rs60 billion

Tax deducted on amount billed instead of actual recovery

Zafar Bhutta March 12, 2016


A delay in the general sales tax refund, which has soared to more than Rs60 billion, by the Federal Board of Revenue (FBR) has added to the miseries of power companies, say officials aware of the development.

“The FBR is collecting sales tax on the amount billed by power distribution companies rather than on actual recoveries, which has caused a strain on their finances,” an official said, adding the revenue board was not clearing the tax refund claims following fuel price adjustments.

‘Tax refund issue will be taken up with authorities’

The FBR has also frozen accounts of distribution companies several times, which led to delay in payments for different services. “The FBR freezes the account from the 23rd to 25th of a month and lifts the restriction on the 10th of next month,” the official said.

However, the official pointed out that the recovery of electricity bills had reached a record high for the past 10 years. “The collection of bills stood at 93.3% in 2006, but it dropped to 88.7% in 2013, however, last year it improved and touched 93.4%,” he said.

Apart from this, transmission and distribution losses were at the lowest level for the last 10 years. Average losses were recorded at 19.4% in 2007, which shrank to 18% in 2015, resulting in savings of Rs10 billion.

The Ministry of Water and Power is undertaking a host of measures including the development of new power projects to increase the production of electricity. Among these was the resumption of production by the 415-megawatt Siemens block of Guddu Power Complex that has two gas turbines and one steam turbine. It is now contributing electricity to the national grid.

Incentive: Rice exporters demand zero-rated tax regime

The entire plant had stopped power generation in 2013 after the gas and steam turbines were damaged.

As part of the programme of utilising and rehabilitating the existing generation capacity, the government in 2015 awarded a contract to Mapna, an Iranian company, for rehabilitating the plant at the Siemens block. With the completion of work on the two turbines, 270MW of electricity has been added to the network.

Another gas turbine is also being revamped, which will add 100MW to the system by the end of April.

A flow of around 450MW is expected from the Chashma-III and wind power projects before summer this year. As a result, the new power plants and the rehabilitation programme will increase the country’s production capacity by a cumulative 820MW during summer this year.

Published in The Express Tribune, March 13th, 2016.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.


Rustam | 5 years ago | Reply @Javed: Really ?. Do you think, as stated in the article, that with increase in the country’s production capacity by a cumulative 820 MW during summer this year, the deficit of more than 5,000 MW would be eliminated. Is it oversight of 820 as 8,200 or else?.
Javed | 5 years ago | Reply Reading this article make me feel that all the power problems in Pakistan are solved.
Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ


Most Read