Power tariff hike not necessary: businessmen

KARACHI: Businessmen all over Pakistan have rejected the recent increase of 26 paisa in power tariff, saying that the increase would not have been necessary had the government managed to curtail the growing circular debt.

They said that despite rising fuel costs, the government could have held out at current rates, and they did not do so to generate more money to ease the circular debt crisis.

Zubair Motiwala, Adviser to the Sindh CM on Investments, said that circular debt is an issue where Pakistan can die economically if not resolved. “I met with US special envoy Richard Holbrooke on one occasion and raised this issue,” he said, adding that Holbrooke said America was ready to help Pakistan out of the crisis only if they were assured that the problem would not arise again.

Motiwala was of the opinion that increase in the electricity tariff was not the solution to the problem, instead it increased both the cost of living and business further.

The circular debt is increasing by the day as it has gone beyond Rs180 billion now. Pakistan has 30-40 per cent line losses which are amongst the highest in the world, he added.

“The government has increased power tariffs again which means that the one who is stealing gets more benefits, while the one who is paying is penalised more,” he stated.

Motiwala said that during his tenure at the KESC board around five years ago, he had allocated Rs1 billion to deal with the problem of line losses, which was never followed up once his tenure was over.

Former president of Karachi Chamber of Commerce and Industry, Anjum Nisar, was also of the view that increasing power tariffs is not the solution and it is just an excuse to deal with the circular debt problem as the increasing international fuel rates are compounding the problems.

Like Motiwala, Nisar also said that it is essential to curb transmission losses and theft to deal with the matter. He said that power companies should be made responsible for their own acts and the government should not jump in to help them. He also said that all the loss-making government entities including power companies should be privatised to reduce the amount of debt.

Chairman of Korangi Association of Trade and Industry (KATI), Razzak Hashim Paracha, said that it is very essential for all the institutions involved in the circular debt to sit down and ask for their money from the government. There should be a level-playing field, he added.

“The problem is that when the government itself is such a big borrower, how can it deal with this debt,” Paracha pointed out.

Published in The Express Tribune, August 28^th, 2010.