Industry decries more tariff hike

Says rebasing, increase in net distribution margins will further cripple production

LAHORE:

 

The industrial community of Punjab, particularly the value-added textile export sector, has condemned the proposed increase in base tariffs sought by power distribution companies (DISCOs), including Islamabad, Faisalabad and Lahore electricity supplying companies, describing the move as unjustified and disastrous for an already struggling manufacturing base.

Industrial associations questioned why the government continues to allow DISCOs to demand further tariff escalation when electricity prices have already risen and power consumption is visibly declining due to the closure of industrial units. Reacting to the public hearing conducted by the National Electric Power Regulatory Authority (Nepra), the Pakistan Hosiery Manufacturers and Exporters Association (PHMA) North Zone said the proposed rebasing and upward revision in net distribution margins (NDMs) would further cripple production, particularly in Punjab where exporters are paying the highest electricity and gas tariffs as well as other utilities in the region.

According to industry leaders, Pakistan's energy prices now exceed those in India, China and Bangladesh by a wide margin, leaving local exporters unable to compete in global markets. PHMA Zonal Chairman Abdul Hameed said the industry was already under unbearable pressure from high power tariffs, re-gasified liquefied natural gas (RLNG) prices and rising input costs, and warned that any further increase would accelerate the shutdown of small and medium-sized production units.

He added that the government should finally end the controversial practice of granting free electricity to the elite, including high government officials, judges and former dignitaries, because the burden of those "free" units is ultimately shifted to ordinary consumers and the industry alike. "Such preferential treatment is a blatant discrimination: while exporters and workers struggle to pay skyrocketing bills, a small privileged class continues to enjoy subsidised electricity at the public's expense." Abdul Hameed questioned the logic of allowing DISCOs to seek higher NDMs despite their continuous operational inefficiencies and falling electricity sales. He said instead of demanding an increase every few months, the distribution companies should be held accountable for losses, poor recoveries and mismanagement.

He stressed that the purpose of restructuring was to reduce costs and improve service, but tariffs have been increased repeatedly while performance has not improved. Former PHMA chairman Shehzad Azam Khan said tariff escalation at a time when industries are scaling back operations defies economic sense. He said Pakistan's industrial power consumption has been falling for months, reflecting the inability of manufacturers to sustain production at the existing energy prices.

He added that granting further tariff hikes to DISCOs would only push more factories towards closure and reduce the country's already shrinking export base.

Shehzad Azam noted that global buyers are unwilling to pay higher prices and Pakistani exporters are losing orders to competitors whose energy tariffs remain significantly lower. Even though the government claims RLNG reliance has decreased and global fuel prices have stabilised, electricity rates in Pakistan continue to rise without justification, he said.

Former PHMA zonal chairman Naseer Butt said the export-oriented sector in Punjab is heading towards collapse. He said industrial units are shutting down quietly every month and thousands of workers are being laid off as manufacturers fail to cope with energy bills that have more than doubled in recent years.

He said it was alarming that despite the economic slowdown, DISCOs continue to present inflated cost projections and seek additional charges from an industry that is already struggling for survival. He emphasised that the government must explain why the burden of inefficiencies, capacity payments and administrative costs is repeatedly transferred to the industry, even though the intent behind privatisation was to reduce such pressures.

Naseer Butt said that instead of facilitating growth, frequent tariff increases are eroding Pakistan's industrial foundation. The industry representatives warned that if the proposed hikes are approved, the province could witness a wave of closures across textile, apparel and SME sectors.