Power tariff cut: Govt’s half-hearted attempt invites criticism
ICCI chief says electricity price in Pakistan highest in region
ISLAMABAD:
The Islamabad Chamber of Commerce and Industry (ICCI) has disliked the government’s move to withhold Rs0.60 out of Rs2.97 per unit reduction in electricity tariff approved by the National Electric Power Regulatory Authority (Nepra) for consumers of nine distribution companies.
Nepra had called for ensuring full implementation of the 20% cut in power tariff in order to provide relief to the business and general population.
In a statement, ICCI President Muzammil Hussain said Nepra had approved a Rs2.97 per unit decrease under the automatic monthly fuel price adjustment mechanism for November, while the consumers were to get a relief of another Rs0.49 (total Rs3.46) on account of a proportionate decline in general sales tax.
But setting aside Rs0.60 per unit for debt servicing by the power sector has deprived the consumers of a relatively higher relief. “It was not a wise move to divert relief in fuel prices to debt servicing because the fuel price adjustment is not a cost of service,” said Hussain.
“Whenever global oil prices went up, the government lost no time in burdening the consumers with the entire impact by raising electricity tariffs, but now with a decrease of almost 45% in prices, they are hesitant to provide benefit to the consumers.”
He said existing power tariff in Pakistan was around Rs14, while with the addition of 17% sales tax and 3.5% excise duty, it would go up to Rs16.95, the highest in the region.
In India and Bangladesh, he pointed out, the tariff was reportedly Rs7.36 and Rs5.47 respectively, while in the US, it was equal to Rs8.59.
“I wonder how Pakistani exporters can compete in regional markets with such a huge disadvantage in power tariff,” he asked. “About 40% of energy in Pakistan is generated through furnace oil, and with the decrease in oil prices, people were expecting a proportionate reduction in tariff.”
Published in The Express Tribune, December 21st, 2014.
The Islamabad Chamber of Commerce and Industry (ICCI) has disliked the government’s move to withhold Rs0.60 out of Rs2.97 per unit reduction in electricity tariff approved by the National Electric Power Regulatory Authority (Nepra) for consumers of nine distribution companies.
Nepra had called for ensuring full implementation of the 20% cut in power tariff in order to provide relief to the business and general population.
In a statement, ICCI President Muzammil Hussain said Nepra had approved a Rs2.97 per unit decrease under the automatic monthly fuel price adjustment mechanism for November, while the consumers were to get a relief of another Rs0.49 (total Rs3.46) on account of a proportionate decline in general sales tax.
But setting aside Rs0.60 per unit for debt servicing by the power sector has deprived the consumers of a relatively higher relief. “It was not a wise move to divert relief in fuel prices to debt servicing because the fuel price adjustment is not a cost of service,” said Hussain.
“Whenever global oil prices went up, the government lost no time in burdening the consumers with the entire impact by raising electricity tariffs, but now with a decrease of almost 45% in prices, they are hesitant to provide benefit to the consumers.”
He said existing power tariff in Pakistan was around Rs14, while with the addition of 17% sales tax and 3.5% excise duty, it would go up to Rs16.95, the highest in the region.
In India and Bangladesh, he pointed out, the tariff was reportedly Rs7.36 and Rs5.47 respectively, while in the US, it was equal to Rs8.59.
“I wonder how Pakistani exporters can compete in regional markets with such a huge disadvantage in power tariff,” he asked. “About 40% of energy in Pakistan is generated through furnace oil, and with the decrease in oil prices, people were expecting a proportionate reduction in tariff.”
Published in The Express Tribune, December 21st, 2014.