Businesses sound alarm over surge in power prices
Different business groups have shown their concern over a recent increase in the fuel adjustment price of electricity, which is Rs7.05 per unit, calling it an unexpected hike from the National Electric Power Regulatory Authority (NEPRA). This increase will put a burden of Rs70 billion on the people of Pakistan, they said.
They also said that apart from domestic consumers, the industrial sector, especially the export-oriented sector, will suffer a huge loss in terms of foreign exchange.
“Repeated hikes in power tariffs are hitting exports and local businesses alike. The government has increased electricity prices many times, and the majority of people have been sent bills many times more than their monthly income,” said Lahore Chamber of Commerce and Industries (LCCI) President Kashif Anwar.
He said that electricity is the main input for industries. If such anti-industry measures are not avoided, the manufacturing sector will be completely destroyed, and the country will remain only a trading place.
“The cost of electricity in Pakistan is already very high compared to other countries in the region, and Pakistani products will be completely out of competition in the international market,” he said.
The country has already lost much of the global market to Bangladesh and India due to high production costs. More burden is being put on those customers who are paying their dues regularly and whose line losses are the least, Anwar said.
He added that the trend of theft will increase due to the increase in electricity prices. “The business community is unable to understand why, instead of controlling line losses and increasing the generation of cheap power through renewable resources, their problems are being compounded.”
Read NEPRA orders inquiry into power rate hike demand
The business community said that the power distribution companies’ (Discos’) losses and inefficiencies stood at Rs77 billion during July-December 2023-24 as compared to Rs62 billion in the same period of 2022-23, showing an addition of Rs15 billion in total circular debt stock. The total amount of losses and inefficiencies was Rs160 billion during FY2022-23.
Discos’ under-recoveries reached Rs149 billion during the first half of 2023-24 as compared to Rs62 billion during the corresponding period of 2022-23; however, their cumulative under-recoveries stood at Rs236 billion as of June 30, 2023.
“Policy makers sitting in Islamabad have failed to read the writing on the wall. ‘Out-of-the-box thinking’ is required to emerge from the economic crisis,” said Pakistan Business Forum Vice President Ahmad Jawad.
He warned that if energy prices are not slashed by approximately 43%, various industries may not survive as high input costs would lead to the loss of export markets, eventually triggering industrial closures.
“Pakistan, already reeling from skyrocketing inflation for the last three years, similarly, the international competitiveness of Pakistan’s textiles and apparel exports is being continuously eroded by ever-increasing energy prices that, on average, are over twice those of competing countries. One should understand that price hikes have made Pakistani exporters ‘uncompetitive’ in the export markets by a large margin,” said Jawad.
Published in The Express Tribune, February 28th, 2024.
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