LAHORE:
Different business groups have expressed concern over a recent hike in fuel adjustment price of electricity, which is Rs 7.05 per unit, calling it an unexpected increase by the National Electricity Regulatory Authority (NEPRA). This increase will cost the people of Pakistan Rs 70 billion, they said.
They also said that apart from domestic consumers, the industrial sector, especially the export sector, would suffer huge foreign exchange losses.
“Repeated hikes in electricity tariffs are hitting exports and local businesses alike. The government has hiked the electricity rates several times and most people have been sent bills of multiples of their monthly income,” said Lahore Chamber of Commerce and Industry (LCCI) President Kashif Anwar.
He said electricity is the main input for industries. If such anti-industrial measures are not avoided, the manufacturing sector will be completely destroyed and the country will remain only a place of trade.
“The cost of electricity in Pakistan is already very high compared to other countries in the region and Pakistani products will be completely out of competition in the international market,” he said.
The country has already lost much of the global market to Bangladesh and India due to high production costs. A greater burden falls on those customers who pay their dues regularly and whose line losses are least, Anwar said.
He added that the trend of thefts will increase due to the increase in electricity prices. “The business community can’t understand why, instead of controlling line losses and increasing the generation of cheap energy through renewable sources, their problems are getting worse.”
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The business community said losses and inefficiencies of electricity distribution companies (Discos) stood at Rs 77 billion in July-December 2023-24 compared to Rs 62 billion in the same period 2022-23, showing an addition of Rs 15 billion Total debt circular Rs. The total amount of losses and inefficiencies was Rs 160 billion during FY2022-23.
The under-recovery of discos reached Rs 149 billion in the first half of 2023-24 compared to Rs 62 billion in the corresponding period of 2022-23. However, their cumulative under-recovery stood at Rs 236 billion as on June 30, 2023.
“Policymakers sitting in Islamabad have failed to read the writing on the wall. A ‘no-brainer’ is required to come out of the economic crisis,” said Pakistan Business Forum Vice President Ahmad Jawad.
He warned that if energy prices are not reduced by about 43%, various industries may not survive as the high cost of inputs would lead to loss of export markets, eventually causing industries to shut down.
“Pakistan, already reeling from soaring inflation over the past three years, similarly, the international competitiveness of Pakistan’s textile and apparel exports is being steadily eroded by ever-increasing energy prices that, on average, are more than double those of competing countries . One must understand that price hikes have made Pakistani exporters ‘uncompetitive’ in export markets by a wide margin,” said Jawad.
Published in The Express Tribune, February 28u2024.
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