Power Division stresses caution on hefty power taxes

Staff Reporter

The Power Division has called for rationalisation of heavy taxes in the power sector, which have pushed the electricity prices higher and added to the burden of the consumers.

Due to the high rates of electricity, power theft became rampant as the tariff was not affordable for the consumers.

In addition, the bleeding power distribution companies of Sindh, Balochistan and Khyber-Pakhtunkhwa (K-P) also largely contributed to the ballooning circular debt.

Officials say that provincial governments are responsible for taking action against those involved in losses.

They said that provinces should give subsidy to the consumers if they are unable to control these losses through local administration.

Sources told The Express Tribune that the Power Division informed further that there were several other factors like heavy taxes and capacity payments, which were piling up circular debt.

Therefore, the Power Division could not deal with these issues alone and it urged all stakeholders to play their due role in addressing these issues.

It informed the cabinet that there are several factors including taxes and capacity payments that have led to increase in electricity rates.

In a recent meeting of the cabinet, the Power Division told members that excess payment of General Sales Tax (GST) worth Rs85 billion have been paid to the Federal Board of Revenue (FBR).

It further said that GST billed by independent power producers (IPPs) stood at Rs117 billion whereas the GST billed to the consumers stood at Rs202 billion.

The Power Division said that the total impact of this amount on consumer tariff was Rs0.85 per unit.

In addition to it, the government was collecting Rs22 billion tax on fuel adjustment charges.

The total amount of fuel adjustment charges with taxes stood at Rs383 billion where it comes to Rs361 billion without taxes and duties from the consumers.

Keeping in view this heavy burden, the Power Division has called for rationalisation of GST and other taxes in power sector to reduce the price of electricity.