Industrialists and economists on Wednesday expressed deep concerns over increase in electricity tariff of 26 paisa per unit, and termed it "an irrational decision", especially for industrial sector that is already facing enormous problems. They were of the opinion that higher cost of power would increase the overall cost of production for industries, thus becoming locally produced goods out of reach of general public.
The business community is of the view that industry is already under extreme pressure due to consistent power shortage, prevailing law and order situation and flood where foreign and local invertors are hesitating to invest. "This increase will only serve to upset the already delicate economic recovery. "Pakistan is already facing tough competition in the international market and this increase would multiply our problems", they said.
President of Karachi Chamber of Commerce and Industry (KCCI) Abdul Majid Haji Muhammad expressing concern on Nepra's decision to allow an increase of 26 paisa per unit in power tariff, said that the country is passing through worst crisis of the century when millions of people are displaced, resources are at stake, this raise is not justified in any circumstances.
The raise adds further to power crisis in the country and highest ever tariffs and abrupt sequel of enhancement in the power tariff for last several months has brought the industry to the verge of closure owing to exorbitant cost of doing production/business which is not viable to run the industry.
He lamented that no concrete measures have been witnessed regarding improvement in electricity distribution, generation, and in this regard neither transmission infrastructure nor the load-shedding has been controlled. He voiced that adjustment in fuel cost component on account of fuel price variation is not a justifiable excuse to overcome losses. In spite of this, the power distribution companies, particularly Karachi Electric Supply Company (KESC) , should take concrete measures to seriously curtail its transmission and distribution losses rather than adding on different charges to control its financial losses
Chairman of Korangi Association of Trade and Industry (KATI), Razak Hashim Paracha said that the government must give a clear picture of utility tariffs at least for a year so that the industrialists should plan for production and book orders for exports. He said that industry can not operate in present scenario where utility tariffs are increased after an interval of a few days.
"In present conditions we can not make programme for production, determine products price nor in a position to book orders for exports." He urged the government to take appropriate measure to determine power and gas tariffs at least for a year to save industry from collapse.
He said that the industrialists were frequently demanding to revise utility tariffs downward and as a result that ailing industry would be able to get well from hopelessness. However, the unfavourable conclusion would only give severe harm to the economy.
Chairman of Federal B Area Association of Trade and Industry (FBAATI), Shahid Ismail also cautioned the government about the unpleasant consequences of frequent increase in power tariffs. He said that cost of doing business is highest in Pakistan as compared to other countries and frequent increase in tariff is one of the main causes for unbearable expenses.
He said that due to higher cost of production no new investment is coming and already existing industries are on the verge of closure. Industries were not able to fulfil the domestic needs in the current circumstances where power tariff was increasing frequently.
Cost of doing business is far higher in Pakistan as compared to its competitors in world market and this hike in power tariff will have serious negative affect on the competitiveness of Pak products and its exportable. Referring about impact of 26 paisa per unit increase in power tariff, he said that cost of production will increase by about 10 percent where power consumption in very high. Shahid criticised the unproductive policies and decisions and lamented that the government announced about 6 percent in October, 2009 and 12 percent hike in power tariffs in January, 2010 under the agreement with IMF, and now allowing Nepra to increase tariffs owing to the impact of fuel cost variation while directly passing to consumer is condemnable.
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