Power users pay ‘Rs860b in taxes’ annually

Minister says options being mulled to terminate contracts with expensive IPPs

ISLAMABAD:

Power Minister Sardar Awais Ahmad Khan Leghari on Thursday expressed his displeasure over the Federal Board of Revenue (FBR) turning his sector into a collection agent, as it came to the surface that electricity consumers paid around Rs860 billion in taxes every year.

The disclosure was made during the National Assembly Standing Committee on Energy’s meeting, presided over by Muhammad Idrees, held to discuss the excessive electricity billing in Karachi and the country’s northern tribal districts as well as the prolonged unannounced power outages.

The federal power minister also attended the meeting.

The Power Division officials briefed the committee about the performance of the ministry.

The Power Division secretary informed the NA panel that 10 to 12% tax was levied on electricity bills ranging between Rs500 and Rs20,000.

He continued that 7.5% advance tax was applied to an electricity bill of Rs25,000 and in addition, a 4% sales tax was also levied.

He said the government was working fast to hand over the power sector to the private sector soon.

The official told the panel that there were about 100 independent power producers (IPPs) across the country and 11 distribution companies.

He added that the Private Power and Infrastructure Board (PPIB) signed contracts with the IPPs.

A member of the panel pointed out that the IPPs were managed by the National Electric Power Regulatory Authority (Nepra).

On a query if there was an authority to terminate these contracts, the officials replied that currently the country had an overall production capacity of 45,018 MW.

Elaborating further, they continued that the production capacity of the hydropower sources stood at 9,331 MW, thermal at 4,507 MW, and nuclear at 3,545 MW.

The officials told the committee that the total production capacity of government sources was 17,383 MW while that of the private sector stood at 27,635 MW.

The panel was informed that the production of electricity in May and June was close to 28,000 MW.

The officials said hydropower produced 28% of the total electricity production, gas accounted for 28.3%, nuclear sources generated 18.6%, coal 16%, solar energy 5%, and oil 4%.

The Power Division officials told the committee that no plants would be set up except for hydropower and Thar coal ones.

They added that it was the government’s decision not to set up any power plant that ran on imported fuel.

The power minister told the panel that  four plants were going to be converted to domestic coal, adding that the move would save the country around $1 billion.