Retailers decry highest tariff of Rs77 per unit

Say soaring costs have sparked business closures, increased poverty

LAHORE:

The operators of chain stores have called on the government to take serious notice of the ever-rising power tariff for the commercial consumers, which has surged to the peak of Rs77.15 per unit, the highest tariff for all electricity consumers in the country.

“Soaring electricity costs pose a major threat to retailers, traders and exporters, severely impacting their competitiveness and affordability. This situation has also adversely affected household budgets, reducing their purchasing power and making it increasingly difficult for businesses to sell products and for consumers to buy them,” said Chainstore Association of Pakistan (CAP) Chairman Tariq Mehboob.

This has led to business closures and exacerbated poverty levels. Over the past two years, Pakistan has seen a historic surge in the base electricity tariff. As a result, the tariff for residential customers has reached Rs48.84 per unit while the tariff for commercial customers has soared to Rs77.15 per unit.

Including various taxes, these prices reach alarming levels, with electricity bills for retailers often exceeding their rents, he said.

“How can a business survive in this situation? Commercial consumers, especially the organised retailers, who pay their bills on time, are burdened with the highest tariffs because they are paying even more in cross-subsidies than the industrial consumers to keep tariffs artificially low for lifeline consumers,” Mehboob said.

He stressed that though the provision of relief to the low-income households was essential, the government must finance the subsidy for residential consumers from its own sources, for instance, the Benazir Income Support Programme (BISP), rather than making other sectors completely unviable.

According to the retailers and industrialists, one of the primary reasons for the sky-high electricity prices is the substantial capacity payments to the independent power producers (IPPs).

Recent reports suggest that electricity consumers are set to make capacity payments of Rs2.8 trillion during the current financial year 2024-25. These payments account for 70% of the electricity tariff for consumers, with the remaining 30% attributed to energy costs, he added. The chain stores association urged the government to communicate details transparently regarding the IPPs, including their role, capacity payments and justifications to alleviate public anxiety.

“Transparency is essential to build trust. All segments of the Pakistani society are raising concerns about the agreements with the IPPs and asking for revisiting the unsustainable terms and conditions.”