'Pepco defeats PM's export-led growth strategy'

Pakistan Electric Power Company (PEPCO) has defeated the export-led growth strategy of Prime Minister Imran Khan by denying the relief in tariff announced by the federal government for the months of Nov 2019 to Feb 2020, said sources.

According to the sources, the Managing Director PEPCO has approved a policy of charging Rs 11.97/kWh on the enhanced units from Nov 2019 to Feb 2020 from domestic, commercial and all categories of industrial consumers except the exporting sectors.

The consumers in the above tariff would be allowed flat-rate tariff of Rs 11.97/kWh only for the enhanced units with respect to their previous consumption during the corresponding month of last year. The distribution companies (DISCOs) would charge the additional 200 units at Rs 11.97/kWh in case they have consumed 1200 units in Nov 2019 against 1000 units in Nov 2018.

The general industry would also qualify under the new tariff scheme even if a sick industrial unit was active /connected with the DISCOs system but was consuming zero or nominal units during previous year i.e. Nov 2018 to Feb 2020 and resumes operations now. However, this policy of enhancing electricity consumption during winter season has not been extended to exporting industry, which is running from pillar to post to ensure affordable energy to compete internationally.

It may be noted that PTI government had introduced a unified tariff of 7.5 cents (i.e. Rs 11.70/kWh and total cost turns into Rs 12/kWh with the addition of overhead charges) for the exporting industry.

On 1st of July, while withdrawing the zero-rating facility to the exporting sector, the government added an additional surcharge of Rs 2.63/kWh, jacking up the exporting industry tariff to Rs 14.63/kWh. The additional surcharge was a combination of General Sales Tax, Income Tax, Quarterly Tariff Adjustment (QTA), Additional Distribution Margin (ADMC) and Fuel Price Adjustment (FPA) etc. This situation has led to the switching of exporting units on gas supplies while relinquishing some 350-megawatt electricity due to its high cost.

Sources said the government was announcing incentives to domestic consumers in order to enhance the off-take of electricity while it was adding the cost of electricity for the exporting industry simultaneously. They said it is quite difficult to understand how the domestic consumer would enhance its off-take in order to qualify for the incentive of concessional tariff on incremental use of electricity. While the exporting industry, which badly needs electricity at an affordable price to increase exports and earn precious foreign exchange for the country, has been deprived of electricity supply at an affordable price. This situation, they said, has defeated the purpose because of the increase in electricity price for the exporting sectors. The government has not only denied a similar incentive to the exporting industry but it has also added an additional burden on the exporting industry after withdrawing the facility of zero-rating. It is worth noting that the exporting industry is the bulk consumer of electricity in the country, which is left in the lurch as many mills have no other sources of energy and withdrawal of electricity at 7.5 cents would play havoc with all such mills.

They have suggested that the government should restore the retrospective withdrawal of flat tariff of 7.5 cents for the exporting industry from July 1, in case it cannot extend the relief of concessional tariff to it.