Pakistan Industrial & Traders Associations Front (PIAF) while strongly rejecting the significant jump in electricity prices up to Rs15 per unit for exporters and farmers and hike in gas tariffs by Rs110 per mmbtu to meet the IMF ninth review prior condition has said that it will put additional burden of over Rs240 billion. It said that high cost of doing business has proved to be dangerous for Pakistan’s industry.
In a statement issued on Saturday, Chairman PIAF Faheem ur Rehman Saigol observed that it is unfortunate that the government has approved the passing of Rs237 billion additional burden on consumers through a direct tariff increase and an indirect increase through the withdrawal of subsidies given to exporters and farmers.
But the move will not solve the issue of circular debt, as it has still shown Rs335 billion in additional subsidies in the revised Circular Debt Management Plan, taking them to Rs2.34 trillion, he added.
He said that the government liquidity and external vulnerability risks are elevated and there remain considerable risks around it’s ability to secure required financing to fully meet its needs for the next few years.
Faheem ur Rehman Saigol said that constant hike in power tariff has pushed the electricity prices higher and added to the already soaring cost of trade and industry.
The PIAF chairman asked the government to shut down all expensive oil-based power plants to ensure availability of cheaper energy for consumers. PIAF Chairman condemned the government for shifting power distribution companies’ inefficiencies’ burden to the consumers by jacking up the tariff under the guise of Fuel Charges Adjustment, as the ECC has also given the go-ahead to the recovery of pending fuel cost adjustment from consumers to collect Rs68 billion.
It is to be noted that the government has pledged to stop any further rise in circular debt adding that around Rs 170 to Rs 270 billion is added to the gas circular debt annually though the actual figures are available with Petroleum Division. However, if 11.5 percent price hike for SNGPL and 11 percent tariff for SSGC is not implemented then the circular debt will rise to Rs 740 billion by end-June 2023. At present, the gas tariff for residential consumers is Rs 450 per mmbtu in the Sui Southern Gas Company system against the prescribed price of Rs 850 per mmbtu and Rs 400 per mmbtu in the Sui Northern Gas Pipeline Limited system against the prescribed price of Rs 1,007 per mmbtu, showing a significant gap between sale price and actual cost of gas.
The ECC approved the imposition of three separate quarterly surcharges in the range of Rs0.69 to Rs3.21 per unit. Industrial consumers will also be impacted by the debt surcharge of Rs3.39 per unit, which pushes the total increase for them to Rs15.52 per unit. The industrial tariff will now go up to Rs36 per unit.
Moreover, there will be an additional increase of Rs3.62 per unit in the cost of electricity on account of quarterly surcharge to collect Rs73 billion, excluding the impact of the pending fuel cost adjustments.
The government has also imposed a debt servicing surcharge of Rs3.39 per unit, taking the net additional increase to Rs7 per unit for the domestic consumers. These consumers are already paying a cost of up to Rs32.7 per unit, excluding taxes. The government approved the withdrawal of electricity subsidy of Rs12.13 per unit, given to the exporters, with effect from March 2023 to pass on another burden of Rs51 billion.
The ECC also approved the withdrawal of electricity subsidies for farmers to save Rs14 billion in four months. The effective increase for the farmers will be around Rs3.30 per unit but they will still be paying subsidised rates.
