Uniform energy rates

It was extremely disturbing to hear Asad Umar, Chairman of the Standing Committee on Industry and Production, as well as a prominent Pakistan Tehreek-e-Insaf (PTI) leader, who is often been cited as a man with a successful business management experience, blatantly play to the gallery during a recent committee meeting. He reportedly stated that there must be no discrimination on energy input price for the textile sector and recommended a unified energy price to be available throughout the country. Umar's statement was in response to the presentation by Gohar Ejaz, Chairman Advisory Council All Pakistan Textile Mills Association, which he concluded by arguing in favour of 7 cents per unit energy price for the textile sector throughout the country.
Umar further acknowledged that "under Article 158 of the Constitution the availability of natural resources could be an issue but there can be no issue on the pricing of energy." Article 158 stipulates that "the province in which a wellhead of natural gas is situated shall have precedence over other parts of Pakistan in meeting the requirements from that wellhead, subject to the commitments and obligations as on the commencing day". This has effectively implied that Sindh with considerable gas reserves and Punjab reliant on import of gas from other provinces and recently accessing the imported Re-gasified Liquefied Natural Gas (RLNG) through the Sui Southern Gas Company Limited (SSGCL) network is paying 932 rupees per million British thermal unit (mmbtu) compared to domestic gas which is being provided to Sindh industry at 600 rupees per mmbtu.
It is little wonder that Punjab industrialists in general and the textile manufacturers in particular have been lamenting the input cost differentials with their counterparts in Sindh with reference to gas prices and have subsequently launched a campaign for equalizing the cost of electricity throughout the country. Aziz Ullah Goheer, secretary general of Pakistan Textile Exporters Association, stated a year ago: "Forget international competitiveness for the time being; how do you expect Punjab's export industry to compete with Sindh in terms of export orders given the current price discrimination which is increasing cost of doing business? We are requesting the government to apply a weighted average price between system gas and RLNG which will stand somewhere between 500 rupees and 550 rupees per mmbtu." Sindh industrialists on the other hand are insisting, and with justification, that any increase in their price would be violative of Article 158.
Additionally, the cost of supply of electricity differs between different distribution companies with differing line and transmission losses, different rates of bills/dues cleared by consumers. A uniform electricity rate implies following an economically imperfect model where the consumers of the more efficient Discos pay for the more inefficient ones, which in effect, takes away the incentive of Discos to improve their performance. True that some of the very poor areas of the country, particularly Federally Administered Tribal Areas, have an extremely poor record of clearing of due electricity bills with poverty a major factor, yet by extending a subsidy to those who consume 200 units a month or less the government is in effect subsidizing these consumers in any event.
There is therefore a need for Pakistan to consider differing electricity rates in different provinces/Discos based on the performance of each Disco. In India, for example, each state sets a different rate with some having a larger fixed rate but lower rates on kilowatt hour (KwH) used, while others charge more per KwH and offer a cheap fixed cost. Furthermore, the rate of rupees/KwH can often vary depending upon power usage, connection type or connection capacity as well as different peak hour surcharges.