Rs3/unit more hike to cost Rs136bn on power consumers: FPCCI Business Panel

Anjum Nisar said that Pakistan’s industry had been harmed by the high cost of doing business

(Web Desk) - The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) has assailed the NEPRA to approve another electricity rate hike of up to Rs3.5 per unit under quarterly adjustments, leading to an additional burden of Rs136 billion on power consumers, as energy affordability for industry is critical to boost economic growth in the country.

FPCCI former president and Businessmen Panel (BMP) Chairman Mian Anjum Nisar, calling for charting out a viable way forward to promote renewable energy transition under worsening global and domestic energy inflation for sustainable economic development and providing relief to the industry from external price shocks, he said that until now, consumers were paying an additional Rs1.25 per unit due to ongoing quarterly adjustments. He added that out of the total increase, the new Rs1.25 per unit will remain, while an additional Rs2.03 per unit will be imposed for the next six months.

The BMP chairman remarked that the energy sector’s success depended on reliability, affordability and accessibility. Mian Anjum Nisar said that the increase in electricity tariffs will have varying impacts on different categories of consumers as for households consuming between 1-100 and 101-200 units, there will be a tariff increase of Rs3.2814 per unit. This rate will continue for households consuming 201-700 units, while those using more than 700 units will face an additional charge of Rs3.2814 per unit.

In the case of commercial consumers with a sanctioned load of less than 5kW, they will encounter a uniform rate increase of Rs3.2814 per unit. For commercial consumers with a sanctioned load of 5kW and above, the same rate will apply, along with the introduction of a Time of Use (TOU) category for peak and off-peak consumption, also set at Rs3.2814 per kWh. Electric Vehicle Charging Stations will be billed at the same rate.

He revealed that the major recovery would come from capacity payments amounting to Rs145 billion, to be collected from consumers who had consistently paid their bills. These payments will be disbursed to power plants that remained idle and out of operation.

He also stressed the need for improvement in forecasting mechanisms to ensure return on investments for renewable energy projects.

We are confronting a poly-crisis globally and domestically; there is a pressing need for innovative solutions to achieve a balance between soaring energy prices and capacity payment issues to alleviate some of the sufferings of the public. He underlined that there was an immediate need for execution of solar and wind projects through competitive bidding.

He called for tapping into the Green Climate Fund to catalyze the national-level energy transition projects. He emphasized the need for scaling up off-grid systems to address social challenges and increase energy access for marginalized communities. He said opting for wind energy in low-load areas like south Punjab and improving transmission from such points to high-demand areas would prevent transmission losses. He urged the government to focus on indigenizing the manufacturing of solar PVs, inverters, etc to reduce technology cost and import dependence.

He also called for introducing hybrid renewable energy technologies in areas with low wind pressure to scale up the integration of wind in renewable energy. He urged the government to focus on technology transfer and concessionary financing for the indigenous manufacturing of renewable energy technologies.

Anjum Nisar condemned the move, stating the burden of power theft, mismanagement, and inefficiencies should not be shifted to the trade and industry consumers, as it would prove to be dangerous for overall economy. FPCCI former president asked the Pakistan authorities urgently need to strengthen energy sector viability by aligning tariffs with costs, reforming the sectors cost base, and better-targeting power subsidies.

Anjum Nisar said that Pakistan’s industry had been harmed by the high cost of doing business, which discouraged investment in capacity and capability and called for easing the burden of heavy taxes on the power sector.

He said that the high cost of doing business has proved to be dangerous for Pakistan’s industry, discouraging investment both in capacity and capability, calling for lessening the burden of heavy taxes on the power sector.

While describing the government’s decision to increase electricity tariffs as a shameful decision, he urged the government to reverse the increase. The government’s decision to increase the electricity tariff is anti-industry, and the BMP strongly condemns the government’s decision and calls on it to rescind it. He urged the power ministry to identify system constraints and communicate targets to all concerned departments in order to launch a wartime effort to upgrade the transmission system.

He said that the government is ignoring the fact that the gap between the generation and consumer cost is chiefly because of power theft and inefficiency of the heads of power distribution companies who are well protected by their political masters. It is a disastrous decision, which will encourage electricity theft. He said that the increase should have been linked with a reduction in line losses.