Surging cost of doing business poses threat to industry, discourages investment: PITAF

LAHORE: The Pakistan Industrial and Traders Associations Front (PITAF) has 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.

PIAF senior vice chairman Nasir Hameed and vice chairman Javed Siddiqi, in a joint statement issued here on Saturday, condemned the National Electric Power Regulatory Authority (NEPRA) for shifting power distribution companies’ inefficiencies’ burden of almost Rs58 billion to the consumers by jacking up the tariff by Rs5.94 per unit under Fuel Charges Adjustment (FCA) to be charged through March 2022 electricity bills.

Nasir Hameed said that constant hike in power tariff on the plea of fuel adjustment has pushed the electricity prices higher and added to the already soaring cost of trade and industry.

According to NEPRA notification, an increase of Rs5.94 per unit on account of FCA for Jan 2022 will be charged from the power consumers through the electricity bill of March 2022 which will cause additional burden of approximately Rs58.5 billion on consumers. Similarly, this increase in the power price by Rs5.94 per unit will be applicable to all the consumer categories of all the Ex-WAPDA power distribution companies.

Javed Siddiqi said that the regulatory authority had earlier increased power tariff by Rs3.09 per unit on account of FCA for Dec 2021 which placed an additional burden of Rs30 billion on the power consumers while more than 8.5 billion units of electricity were used in December last year.

He said that the Authority has also approved an increase of Rs 2.90 per unit in FCA of KE for Jan 2022 to recover Rs 3.176 billion from consumers after adjustments of Rs 550 million and Paisa 30 reduction in Quarterly Tariff Adjustment Oct-Dec 2021.

He asked the government to shut down all expensive oil-based power plants to ensure availability of cheaper energy for consumers. He lamented that the previous government did not pay heed to rehabilitation and maintenance of old power plants which caused several system constraints, inflicting heavy losses.

According to the data, the total energy generated in January was 8,797 GWh at a total price of Rs107.5 billion, which is Rs12.2199 per unit. Of the total, the net electricity delivered to the DISCOs was 8420.73 GWh with transmission losses of 330.85 GWh.

The data provided to the Nepra indicates that the most expensive sources of energy generation including high-speed diesel (HSD) and residual fuel oil (RFO) were consumed more than in previous months, which also jacked up the total cost of generation while the least expensive (renewable) share reduced drastically during the month. Interestingly, the share of the RLNG-based power also reduced sizably.

The highest share of energy source in the total pie was of coal. The power generated from coal was 2,916.7 GWh (or 33.15pc) with a cost of Rs14.1049/unit. Its cost was also much higher due to price hike in the international market. It was followed by local natural gas and nuclear sources with 14.37 per cent (1264 GWh) each, while the gas charges were Rs7.747/unit.

The furnace-based electricity was generated of around 1238.11 GWh (14.07pc) with a unit cost of Rs22.807. The energy generated from imported RLNG was 626 GWh or 7.12 per cent of total generation with a cost of Rs16.703/unit. The HSD-based energy was generated of 592 GWh costing Rs25.98/unit. Interestingly, due to the normal water shortage in dams in the winter, the share of hydropower generation was only 512.94 GWh or 5.83 per cent in January.

Copyright Business Recorder, 2022