Govt urged to renegotiate capacity charges

Businessmen ask for halt to sales tax collection, reduced tax on electricity

LAHORE:

As Pakistani households and businesses are facing mounting power tariffs, the government should renegotiate capacity charges, put a halt to sales tax collection and reduce the ratio of taxes in electricity bills, a businessmen group demanded.

Speaking at a press conference, Pakistan Business Forum (PBF)’s Punjab Chairman Muhammad Naseer Malik said that the National Electric Power Regulatory Authority (Nepra)’s latest forecast for power purchase prices in fiscal year 2023-24 revealed a substantial financial burden, with consumers bearing 68% of the fixed capacity payments.

Malik pointed out that hefty fuel costs, particularly of petroleum imports, caused extreme volatility and put a strain on the foreign exchange reserves. “There is no clear solution or strategy in sight.” As a result, he said, the end-consumer tariff was increased with effect from July 1, 2023.

PBF expressed serious reservations about the recent hike in electricity prices because it was debilitating for both residential and commercial consumers. High inflation has already negatively affected the businesses and rendering them unprofitable.

The PBF Punjab chairman added that residential consumers were unable to pay their electricity bills and on average residential and commercial consumers were paying 15-20% extra in the form of uniform quarterly adjustments, fuel price adjustments and additional surcharges. Additionally, the residential consumers pay extra 20-25% in the form of electricity duty, sales tax and income tax. They are also required to pay Rs35.57 per kWh for off-peak load and Rs41.89 per kWh for peak load.

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“It is important to note that these charges exclude taxes, fuel cost adjustments, uniform quarterly adjustments and additional surcharges,” he elaborated. Commercial consumers are also charged further tax and extra tax in addition to the electricity duty, sales tax and income tax. In the current bills, they are paying 37-40% of the total electricity charges in taxes and duties.

PBF’s Punjab Secretary General Arif Ehsan Malik stressed that the immediate solution was to slash the operational costs of all DISCOs.

Published in The Express Tribune, September 24^th, 2023.

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