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Federation of Pakistan Chambers

FPCCI resents electricity tariff hike, gas supply shortage

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has resented increase in electricity tariff and supply shortage of gas to industry.

Mian Nasser Hyatt Maggo, President FPCCI in a statement on Friday expressed concerns over electricity tariff hike and disconnection of gas for the industry.

He said that instead of reforming the energy sector, the adhoc and painful decisions are being made detriment to domestic industry.

He said that the much awaited outcome of negotiations between IPPs and government which was considered to be directed towards reduction in base tariff do not assures any decrease in the base tariff, which again is shocking outcome questionable as the private sector was of the view that the report published on IPPs which was required to be further expanded towards the eventual objectives of resulting in the reduced cost of energy for increasing the competitiveness of economy and mitigating the inflationary trapped and consumption requirement of the poor segment of the economy.

He said that the spokesman on the energy has attributed the need of tariff hike due to bad and corrupt agreements made with IPPs in the past. He said that if so, such situation requires to be corrected through invoking all the civil and criminal remedies to correct the agreements by excluding the pay or take, reducing O&M cost, converting the repatriation cost from dollar indexation to rupee and relevant recommended measures in the report.

He said that while appreciating the present government in ordering the inquiry in respect of agreement with IPPs, the outcome does not appear to be reciprocating for base tariff reduction and availability of electricity sale at reduced cost.

He further said that the announcement of Rs40 billion per year off-take of financial burden on Government is marginal even against the present announced tariff base hike wherein one rupee hike is over charging consumers of Rs 100 billion on consumption of electricity.

President FPCCI also said that such on & off increase in tariff is coming in the way of economic development, in specific loaded by the carried forward adverse effect of COVID-19.

The hike if is linked to any part of the memorandum of understanding with IMF can be fairly convinced for freezing such tariff hike when IMF itself projected low economic growth. Such duplicity cannot be justified.

On the other side the predictable outward and inward oriented trade has become hostage of keep on increasing gas prices and intending to disconnect the gas supply of captive power plants.

He said that mismanaged RLNG cargoes by the Petroleum Division are also answerable to such abrupt and non-justified late decisions. He said that during last November the spokesman on energy and petroleum had promised that increasing demand of gas in the winter season will be met through increase in RLNG imports.

It appears that this non-living promise has forced Government to take decision of disconnecting the gas for captive power of industry. The setting of the deadline for disconnection of gas from February 1, 2021and 1st March 2021 is too short time to adjust.

He said that some industry is running on captive powers with some emergency required grid loads need more time to arrange all the equipment’s and settle all the requirements of Discos which would take considerable time.

He said that even CPP’s of industry with equivalent power arrangement from Grid also requires back-up adjustments of power by the Discos which is again time consuming.

Mian Nasser Hyatt Maggo, President FPCCI proposed that the time period provided be extended reasonably in order to shift to Grid power. He said that the penalty of bad agreements with IPPs on capacity and take or pay clauses is being shifted to industry with their self-generation through captive power plants which basically is assurance for reliability and un-interrupted supply.

Discos have yet to claim such performance to supply un-interrupted electricity without load shedding. He said that government spokesman has claimed saving of 150 MMCFD gas by disconnecting CPPs of industry, while the gas leakages in the systems are four times of this saving of 150 MMCD.

He wondered that if there is any efficiency in the management over sighting the political economy of the gas affairs.

He further suggested that even if the government reduces gas loss by one-fourth, the abrupt imposition of such decision may not have been required to adversely affect the industrial economy.