KARACHI: Saquib Fayyaz Magoon, Acting President Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has apprised that the industries in general, and industries of SMEs sector in particular, are on the verge of collapse due to the unbearable and unsustainable financial losses emanating from unprecedented cost of doing business; primarily caused by prices of electricity and gas.
Magoon categorically stated that FPCCI unequivocally demands that the announced 9 cents/ kWh power tariff by the government should be implemented with immediate effect. We are paying 17 cents/ kWh; whereas, our regional competitors are getting electricity at half of that price, he added.
He explained that the power purchase price has increased by 95.82% since July 2018; which is mainly due to the higher capacity component in the power tariff.
Last year, we witnessed a 10% reduction in power generation; which resulted in a higher per unit capacity component. Estimates indicate that for the fiscal year 2023-24, industrial consumers face a cross-subsidy burden of Rs 244 billion. Cross subsidization must end to protect trade & industry as it is unfair and makes no economic sense, he added.
On gas sector woes, he said that earlier this month, the federal cabinet approved a significant increase in gas prices; raising them by up to 67% for residential users and by 700% for fertilizer plants. A hike in gas tariffs for fertilizer plants is expected to significantly contribute to food inflation in the country. On top of that, gas production in the country has experienced a decline; dropping from 4,063 MMCFD in 2012 to 3,505 MMCFD in 2022.
Magoon demanded that net metering should be allowed on all solar systems above 1-kW to create enabling environment for domestic and industrial consumers to generate their own electricity, which may cost as low as 4 cents/ kWh. A crystal clear solar policy should be announced by the government in this regard, he added.
Asif Inam, VP FPCCI & Chairman APTMA, highlighted that the country has 47,000 megawatt installed generation capacity, but the transmission & distribution capacity is only 28,000 megawatt.
Therefore, independent power producers (IPPs) on take-or-pay basis are causing enormous financial burden on the consumers across the board, be it household, commercial or industrial, he added.
Asif Inam added that another 17,000 megawatt generation capacity is in the pipeline; and, on the other hand, the electricity consumption in the industrial sector has declined by 25% due to unaffordable power tariff. Where are we going to use this excessive capacity, at a time when industrial production is no more feasible, he asked.
This stands true for not only export-oriented industries; but, also for domestic consumption of the industrial products. The question here is that instead of import substitution, we may end up importing the goods in future; which we already produce within the country, he added.
Adeel Siddiqui, former VP FPCCI & President Hyderabad Chamber of Commerce & Industry (HCCI), pointed out that we have 55-MW wind power corridor waiting to be tapped. He strongly denounced fuel adjustment charges for being a tool to further squeeze the regularly paying consumers of electricity.
Additionally, he informed that 80% bangles industry has shut down as they could no longer afford electricity.
Copyright Business Recorder, 2024
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