FPCCI concerns over power hike; demands cut in taxes

LAHORE, Aug 29 (APP): Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Iqbal Sheikh said on Tuesday that Pakistani households and businesses were facing mounting power tariff.
He demanded for renegotiating capacity charges and put a halt to sales tax, besides reducing the ratio and number of taxes in the electricity bills.

Addressing a press conference here at FPCCI Regional office, he added that NEPRA’s latest forecast for power purchase prices for the fiscal year 2023-24 reveals a substantial financial burden, with consumers to bear 68 percent of costs for fixed capacity payments; primarily benefiting coal plants.

Irfan Iqbal Sheikh explained that substantial fuel costs – particularly petroleum imports –potentially pose extreme volatility and strain on foreign exchange reserves; with no clear solution or strategy in sight. As a result, end consumer tariff had been increased and applicable with effect from July 1, 2023.

The FPCCI rejected the recent hike in electricity prices; because it was debilitating both for residential and commercial consumers; and, inflation already affecting negatively the businesses and rendering them unprofitable.

The FPCCI President added that currently, residential consumers were unable to pay their electricity bills across the country; and, on an average, residential and commercial consumers pay 15 to 20 percent extra in the form of uniform quarterly adjustment; fuel price adjustments and additional surcharges.

Additionally, residential consumers pay an extra 20 to 25 percent in the form of electricity duty, sales tax and income tax; and, residential consumers were subjected to pay Rs. 35.57 per kWh for off-peak load and Rs. 41.89 per kWh for peak load, he claimed. “It is important to note that these charges exclude taxes, fuel cost adjustments, uniform quarterly adjustments and additional surcharges,” he mentioned.

Whereas, commercial consumers were also charged with further tax and extra tax in addition to electricity duty, sales tax and income tax. In current bills, commercial consumers were paying 37 to 40 percent of the total electricity charges in taxes and duties, he continued.

Irfan Iqbal Sheikh explained that a commercial consumer with electricity consumption of 5000 kWh had to pay Rs. 381,785 in electricity bill, while around Rs. 135,994 would go into taxes and duties; not including additional surcharge and fuel cost adjustment.

Sheikh Irfan Iqbal stressed that a better and more viable option should be explored to curb circular debt and provide affordable electricity to consumers. The immediate solution to reduce the power tariff was to reduce the operational costs of all power distribution companies, i.e. withdraw the provision of free electricity to WAPDA employees; reduce transmission & distribution (T&D) losses and eliminate electricity theft.

The FPCCI President proposed that government needs to negotiate with power plants to increase the debt payment period to reduce the capacity component in the power tariff. “We urge the government to halt the imposition of sales tax for 6 to 8 months in order to reduce cost of doing business,” he suggested.

Irfan Iqbal Sheikh maintained that businesses could not survive with the provision of unaffordable electricity; economic growth would be jeopardized and many small & medium enterprises would shut down. “Our profits are already marginalized as a reduction in sales due to record inflation in the country.”