In a determined effort to tackle the mounting issue of excessive electricity bills, Caretaker Prime Minister Anwaar-ul-Haq Kakar has taken charge by demanding a comprehensive plan featuring tangible steps to rationalize power tariffs.
(more…)Tag: electricity tariff
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Jamaat-e-Islami Announces Nationwide Protest Against Soaring Electricity Tariffs
Jamaat-e-Islami on Sunday declared its intent to stage a countrywide protest on Saturday, September 02, 2023, decrying the significant surge in electricity tariff rates.
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Pakistan Implements Electricity Tariff Hike as per IMF Agreement
In a move to reduce the deficit and meet the conditions set by the International Monetary Fund (IMF), Pakistan has officially notified an increase in electricity tariffs on Saturday. The decision will affect both industrial and residential consumers.
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KE adjusts electricity bills under FCA relief package
KARACHI: K-Electric, the power distribution utility for Karachi, has started providing relief under package to waive Fuel Charge Adjustment (FCA), which was announced by Prime Minister Shehbaz Sharif.
According to a statement issued by the power utility on Tuesday, following PM’s Announcement of FCA’s relief package for the month of June, 1.8 million eligible electricity consumers across KE serviced territory in Karachi and adjoining regions are receiving benefit and being delivered adjusted bills for August at their doorsteps with extended due dates.
READ MORE: Date extension demanded for electricity bills payment
The announcement of June’s FCA relief has come in two parts, it was first announced for Non-ToU Residential Consumers having electricity consumption up to 200 units in June, and later it was extended to the same category of consumers with power consumption up to 300 units in June following the announcement by the Government of Pakistan.
While the revised bills for August are being delivered to the consumers on their premises, it is also important to note that all those eligible consumers who have already paid their non-revised August bills will receive adjusted bills for the month of September.
READ MORE: Power tariff hike termed disaster for industries
Commenting on the matter, Spokesperson K-Electric said, “We are taking every possible measure to pass on the benefit to the qualifying consumers in line with the announcement made by the Honorable Prime Minister.
Following the announcement of the relief package, our customer care centers operated for extended hours and remained open during the weekends for consumers’ convenience.
However, to further ease the procedure for their benefit, we are also delivering the bills to consumers’ doorsteps so that they do not have to visit our centers physically. KE Customers may also download their bills via KE WhatsApp Service, KE Live App and from the company’s website.”
While reiterating the eligibility criteria of the relief package, the Spokesperson further said, “June FCA’s relief applies only to Non-ToU residential consumers who have a power consumption equal to or less than 300 units.
READ MORE: Pakistan petroleum sales slump by 24% in 2MFY23
All the remaining electricity consumers, such as ToU residential consumers, Non-ToU residential consumers having power consumption exceeding 300 units, commercial, and industrial consumers do not qualify for the relief, and thus, are requested to timely pay their bills to avoid late payment surcharge.”
“Our customer care platforms, including our call center 118, 8119 SMS service, and social media channels are also available 24/7 to answer any query from our consumers in this regard,” the Spokesperson further added.
K-Electric (KE) is a public listed company incorporated in Pakistan in 1913 as KESC. Privatized in 2005 KE is the only vertically integrated utility in Pakistan supplying electricity within a 6500 km square territory including Karachi and its adjoining areas.
READ MORE: New petroleum prices in Pakistan from September 01, 2022
The majority shares (66.4 per cent) of the company are listed in the PSX owned by KES Power, a consortium of investors including Aljomaih Power Limited of Saudi Arabia, National Industries Group (Holding), Kuwait, and the Infrastructure and Growth Capital Fund (IGCF). The Government of Pakistan is also a minority shareholder (24.36 per cent) in the company.
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Karachi Chamber stresses need to rationalize power tariff
The leadership of Karachi Chamber of Commerce and Industry (KCCI) on Tuesday underscored the exorbitantly high electricity tariffs need to be rationalized as the suggested increased electricity tariffs would prove disastrous for trade, industry, SMEs and the public.
Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Idrees, while highly appreciating the Prime Minister for taking notice of public and business community’s complaints/ protests on inflated electricity bills.
In a joint statement, Chairman BMG and President KCCI said that the business community was grateful to Prime Minister Shehbaz Sharif for taking cognizance of the electricity tariff but while we appreciate, we would like to apprise that the abnormal increase would actually prove to be a disaster for the industries, especially Small & Medium Size Enterprises (SMEs) who are purely dependent on electricity and no alternate source including gas was available to these energy-starved SMEs.
READ MORE: Political parties responsible for Pakistan economic crisis: KCCI
This country badly needs SMEs who must be promoted at any cost as it is a well-known fact that SMEs are the backbone of any country’s economy so supporting SMEs should be the highest priority of the government, they added.
They further opined that trade cannot absorb this kind of an exorbitant increase in electricity tariff and the commercial users will suffer badly hence it has to be rationalized. The increase had been suggested when the dollar rate jumped from Rs180 to more than Rs240 which was abnormal and due to foul play of exchange players but now as it has come down and was likely to descend further, therefore the increase in electricity tariff was not making any sense at all.
They mentioned that the Karachi Chamber along with Industrial Associations and all Chambers of Commerce of Pakistan were of similar opinion that exorbitant increase in electricity tariffs cannot be absorbed hence, we urge the Prime Minister that this needs a rational exercise and carefully looked into because it can prove to be fatal for many industries and would lead to enhancing unemployment across Pakistan while the exports will also suffer badly from this behest.”
READ MORE: Karachi Chamber demands declaring rain emergency
They also pointed out that although ECC approved electricity rate at US$9 cent per kWh to export-oriented sectors from August 1, 2022 but this decision was withdrawn which was an imprudent move as the cost of doing business in Pakistan was already too high as compared to regional competitors.
The government must keep in mind that during the last two months, the exports have been constantly decreasing hence, electricity rate at US$9 cents per kWh to export-oriented sectors must continue otherwise the country’s exports would keep on descending and create more problems for the economy particularly the rising unemployment.
While stressing the need to continuously support the exports, Zubair Motiwala and Muhammad Idrees requested that before issuance of any kind of notification, Prime Minister should look into this matter on an urgent basis so that the uncertainty which has been now triggered due to the electricity tariff hike announcement could come to an end.
They also appealed the Prime Minister to look into NEPRA matters as many decisions taken by NEPRA were purely against the consumers and in recent history, the regulator has never favored the consumers. Why is it that all the decisions taken by NEPRA favor DISCOs and KE only.
READ MORE: KCCI demands release of stuck up containers
This also needs to be seen and the recent decisions of charging FCA and bringing back the fixed charges, which were abolished long time ago but have been arbitrarily reintroduced, must also be deferred.
As consumers’ point of view was never being taken seriously at the so-called public hearing, Chairman BMG and President KCCI demanded that NEPRA rules must be redefined and out of NEPRA’s penal of three judges at the Public Hearings, one should be a representative of consumers through Chamber’s recommendation.
In the end, they reiterated that all actions taken by NEPRA should be remanded back and those in pipeline should also be stopped forthwith.
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NEPRA to conduct public hearing on KE’s petition on July 28
KARACHI: National Electric Power Regulatory Authority (NEPRA) has announced to conduct a public hearing on July 28 over the petition submitted by K-Electric on Fuel Charges Adjustments (FCA) for June 2022.
The utility has sought an increase of Rs11.38/KWh in its FCA petition for June 2022. As per applicable tariff across the country, fuel adjustment is reviewed every month and is applicable on consumer bills for only one particular month.
READ MORE: Revised power tariff, taxes on electricity bills in Pakistan
The major impact on the monthly Fuel cost adjustment of June 2022 is due to an increase in the fuel price increase of Furnace Oil and power purchased from CPPA-G.
The price of RLNG in June 2022 has increased by 50 per cent from March 2022. The price of RLNG as at June 2022 is Rs4,627 / MMBTU as compared to the price of Rs3,083 / MMBTU in March 2022.
The price of electricity from CPPA-G in June 2022 has increased by 74 per cent from March 2022. The price of power purchased from CPPA-G as at June 2022 is Rs15.844/KWh as compared to the price of Rs9.098/ KWh in March 2022.
READ MORE: K-Electric, Siemens sign deal for KKI Grid construction
Fuel Charge Adjustment (FCA) is incurred by utilities due to global variation in fuel prices used to generate electricity and change in the generation mix. These costs are passed through to the consumers following NEPRA’s scrutiny and approval and are one-time charges. Consumers also receive a benefit when the cost of fuel decreases.
After the public hearing and scrutiny, the regulator will make a decision on the request and issue instructions on the period during which these costs can be applied to consumer bills.
READ MORE: Rupee devaluation severely affects KE’s profitability
K-Electric (KE) is a public listed company incorporated in Pakistan in 1913 as KESC. Privatized in 2005 KE is the only vertically integrated utility in Pakistan supplying electricity within a 6500 square Kilometre territory including Karachi and its adjoining areas.
The majority shares (66.4 per cent) of the company are listed in the PSX owned by KES Power, a consortium of investors including Aljomaih Power Limited of Saudi Arabia, National Industries Group (Holding), Kuwait, and the Infrastructure and Growth Capital Fund (IGCF). The Government of Pakistan is also a minority shareholder (24.36 per cent) in the company.
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Revised power tariff, taxes on electricity bills in Pakistan
KARACHI: Various changes have been made to rates of electricity and tariff structure in Pakistan that are effective from July 2022 under the governing laws, rules, and regulations of the Government of Pakistan and NEPRA.
The revises rates are applicable nationwide including on consumers in KE’s service territory.
The determination of costs of electricity to be recovered from consumers across Pakistan in their bills comes under jurisdiction of NEPRA and the Government of Pakistan.
READ MORE: K-Electric, Siemens sign deal for KKI Grid construction
These changes include the non-extension of relief for zero-rated industries as well as the relief on peak-hour electricity consumption for industrial consumers. The retailer tax with revised slabs has been introduced for commercial consumers. Non-Time of Use residential consumers will also see a revision in their applicable tariff along with a change in the methodology for their calculation.
Protected and Unprotected Consumers
As per SRO 1004 dated 7th July 2022, the tariff rates and slab structure for tariff of unprotected non-ToU residential consumers (i.e. consumers with sanctioned load below 5kW) has changed.
READ MORE: Rupee devaluation severely affects KE’s profitability
“Protected” consumers, as per tariff terms proposed by GoP under its Power Subsidy Rationalization Plan and by NEPRA as those non-ToU residential consumers with monthly electricity usage of 200 units or less, consistently for the past 6 months. All other non-ToU residential consumers fall in unprotected category.
Previously, category of unprotected consumers were provided the benefit of one previous slab in their billing (i.e. their billing was done in two slabs), which has now been removed. Consumers in the unprotected category will now only be charged on one slab in which their units fall. Accordingly, tariff rates have also been adjusted downwards to minimize impact on consumers.
Industrial Customers Bills
Industrial consumers were previously being provided a relaxation by Government of Pakistan, allowing them to utilize electricity during peak hours at the same rates as off-peak hours. That relief was allowed until June 2022 and accordingly with no further extension. Peak rates would now be applicable on industrial consumers as well.
READ MORE: KE’s profit up by 161% on high tariff adjustment
Similarly, zero-rated (or export-oriented) industries were being provided electricity at a fixed rate of USD 9 cents/unit, which was applicable till June 2022, has now been removed. Now, these industries will be charged as per applicable tariff rates to normal industrial consumers.
In addition to the above charges, it must also be noted that routine charges under FCA will be applicable in July bills within KE’s service territory.
Retailer Tax for Commercial Consumers
Per the Government of Pakistan Finance Act 2022 applicable across the country, retailer tax on unregistered retailers have been revised and effective from 1st July 2022. For consumers on commercial tariff, a minimum fixed tax of PKR 3,000 will be charged for bills between PKR 0 and PKR 30,000. Monthly bills between PKR 30,001 and PKR 50,000 will be taxed PKR 5,000, while those with monthly bills above PKR 50,0001 will be taxed PKR 10,000.
Important to note that inactive income taxpayers will be charged twice the taxable amounts.
Further, these taxes will apply even if the consumer’s premises are not in use.
Fuel Charges Adjustments (FCA):
READ MORE: K-Electric to raise Rs12 billion through Sukuk
Unprecedented hikes in the price of furnace oil and RLNG were translating into higher costs of electricity production for utilities, and higher costs of electricity for consumers as well. Under the tariff mechanism determined by NEPRA, incremental costs of fuel are recovered from consumers in their bills via Fuel Charges Adjustments (FCA) after the regulator’s scrutiny and approval. Within the decision for FCA, regulator also states that in which month FCA is to be charged. For example, FCA of March 2022 was charged in the month of June 2022.
Accordingly, in its determination for the month of April 2022, NEPRA has allowed KE to charge PKR 5.2718 per unit for units consumed in April 2022 to be billed in the month of July 2022. Further, NEPRA has allowed the FCA for May ’22 be recovered in two parts with PKR 2.6322 per unit charged in July and the remaining PKR 6.8860 per unit in the bills of August ’22. This means customers will see two entries for FCA in their July bills i.e., FCAs for April and May, respectively.
Speaking about the changes, Spokesperson KE stated “We understand that our consumers may have a number of questions about these revisions. To assist them during this time, we have updated our website with frequently asked questions. To reiterate, these changes are introduced under the governing laws of the Government of Pakistan and the rules of the regulatory authority NEPRA and are applicable across the country.
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KCCI appeals rescuing small traders in Catch-22 situation
Karachi Chamber of Commerce and Industry (KCCI) on Saturday declared Catch-22 situation and urged the government to rescue small traders from its fallout.
Chairman Businessmen Group Zubair Motiwala and President KCCI Muhammad Idrees, while referring to upsurge in petroleum prices by Rs60 within a week along with exorbitant hike of Rs7.91 in electricity base tariff and 44 percent increase in SSGC’s gas tariff by OGRA, stated that a catch-22 situation has been created not only for the industries but also for all segments of society particularly the poor masses and small traders/ shopkeepers who simply cannot bear the burnt and were extremely worried over across-the-board inflation triggered by the rising petroleum prices, gas and electricity tariffs.
READ MORE: Energy price hike jolts trade, industry: Businessmen Panel
In a joint statement, Chairman BMG and President KCCI said that it was really unfortunate that the issues being confronted by small traders, who are an integral part of the economy, were not in government’s priority list and it appears that they have been left alone during the ongoing difficult times.
Zubair Motiwala appealed the government to come forward to rescue the small traders and shopkeepers by devising some kind of an effective mechanism to protect their interest and announce a special relief package for small traders/ shopkeepers which could reduce their cost and ensures that they survive in this era of inflation.
READ MORE: Govt. halts gas supply to export industry: APTMA
He said that the inflation has badly gripped the entire society as prices of almost all the household items have skyrocketed making them unaffordable for majority of the public while those people, who were somehow able to afford, have also become very cautious that has brought down the shopkeepers’ sales to somewhere around 20 to 30 percent.
“In this scenario, how a small trader or a shopkeeper will be able to survive and overcome some inevitable expenditures including gas and electricity bills, shop rent and wages to his workers etc.,” he asked.
“It is undoubtedly a dire situation not only for the poor segment of society but also for the lower middle class and even the middle-class families who have been silently going through hunger and starvation as they, being white-collar and educated individual, cannot complain or beg for help from anyone,” Chairman BMG said, “Inflation genie has to contained at any cost otherwise, it will kill the common man.”
READ MORE: SITE industrialists reject increase in power tariff, POL prices
He further stated that in addition to severe devaluation of rupee against dollar, rising electricity tariff and petroleum prices, it was also a matter of grave concerns that OGRA okayed a whopping increase of 44 percent in gas tariff for SSGC which would prove to be the last straw on camel’s back as it would result in closure of thousands of industrial units, trigger massive unemployment and give a boost to smuggling through misuse of Afghan Transit Trade and other illegal channels. “In this scenario, the economy will stay in hot waters, crises would worsen further and the situation may lead to setting off serious anarchy all over the country”, he cautioned.
He said that when the exports have picked up pace and recorded an increase of 26 percent while the manufacturing sector has also witnessed an upsurge of 39 percent, the anti-business moves including raising the interest rates, increasing petroleum prices, electricity tariff and now appreciating the gas tariff have been taken which would withhold the progress of Pakistan and shut down many industrial units who would surely face bankruptcy.
READ MORE: Yarn merchants for reducing utility prices to save industry
Muhammad Idrees said the production activities of the manufacturing sector supplying goods at the local markets have also gone down due to rising cost of doing business and the subsequent increase in the cost of finished goods. “Why would a manufacturing unit keep on producing goods at same pace and capacity when the local markets have become almost stagnant”, he said, adding that it was a very alarming situation which would raise the unemployment all over the country as many people would lose jobs due to limited production activities and closure of hundreds of industrial units which cannot bear the all-time high cost of doing business.
As after increasing the petroleum prices and electricity tariff, the IMF’s demands have mostly been fulfilled hence, President KCCI urged the government to take notice of the situation and take steps for providing relief to the industries, shopkeepers and the poor masses otherwise things are going to get really difficult.
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Energy price hike jolts trade, industry: Businessmen Panel
KARACHI: The massive hike in prices of petroleum products and electricity tariff has jolted the trade and industry as high cost would hamper economic activities.
In a statement on Saturday Mian Anjum Nisar, Chairman of the Businessmen Panel, said that Pakistan’s industry had been harmed by the high cost of doing business, which discouraged investment in capacity and capability and called for easing the burden of heavy taxes on the power sector.
As the oil prices have been increased by another Rs30/liter and power tariff has gone up by Rs7.9/unit the Businessmen Panel (BMP) of the Federation of Pakistan Chambers of Commerce & Industry has stated that the government has dropped a fuel bomb on the businessmen after it suffered an electric shock to meet the conditions of IMF for the revival of the stalled loan program- a recipe to shake the trade and industry.
READ MORE: Govt. halts gas supply to export industry: APTMA
The Businessmen Panel (BMP) chairman and FPCCI former president said that the decision would prove detrimental to the industries due to high cost of doing business and will also open the floodgates of inflation. In addition to making the electricity bills costlier and unaffordable for the consumers, the hike in base tariff would escalate prices of all household goods being widely used in every household, he added.
The FPCCI former president termed the increase in base tariff unlawful and a violation of NEPRA’s own rules and regulations, as any increase in tariff has to be determined and implemented only after holding public hearings but unfortunately they have solely decided to raise the tariff without holding public hearings, he argued.
It is to be noted the government has decided to raise the prices of all petroleum products, just a week after making a similar increase – hours after the National Electric Power Regulatory Authority approved a massive increase of Rs7.91 per unit in the power tariff. Now petrol is available at Rs209.86 per litre, high-speed diesel (HSD) at Rs204.15, kerosene oil at Rs181.94 and light diesel oil at Rs178.31.
With the new hike in the power tariff, the price of a unit is expected to move upwards from Rs16.91 to Rs24.82.
READ MORE: SITE industrialists reject increase in power tariff, POL prices
Despite an inevitable increase in the prices that will unleash a strong wave of inflation, the coalition government remains short of clinching a deal with the International Monetary Fund that still requires an agreement on the budget for fiscal year 2022-23.
On the other hand the NEPRA has increased the electricity rates mainly on account of fuel prices, capacity cost payments and the impact of rupee devaluation against the US dollar.
The base tariff has gone up to Rs24.82/kWh — higher by Rs.7.9078/kWh than the earlier determined national average tariff of Rs16.91/kWh — determined by the power regulator for the ongoing financial year.
This is the highest average tariff rate for power consumers.
He condemned the National Electric Power Regulatory Authority’s decision to increase electricity tariffs, stating that the burden of power theft, mismanagement, and inefficiencies cannot be shifted to consumers on the pretext of fuel adjustment.
Anjum Nisar stated that the constant increase in power tariffs on the pretext of fuel adjustment had increased electricity prices and added to the already high cost of trade and industry. Seeking comparable energy tariffs for domestic industries in order to capture the global market, he stated that due to high electricity rates, power theft became rampant as the tariff was unaffordable to consumers.
He urged the power ministry to identify system constraints and communicate targets to all concerned departments in order to launch a wartime effort to upgrade the transmission system.
READ MORE: Yarn merchants for reducing utility prices to save industry
He urged the completion of all ongoing power projects well ahead of schedule. He stated that business-friendly policies must be adopted, similar to those adopted by other neighboring countries in the region.
He suggested that the amount specified in trade policy be used to promote exports by providing incentives to trade and industry and by exploring new markets. According to the BMP Chairman, Pakistan’s electricity prices were already on the high side, which was the primary reason for the country’s price hikes. He stated that providing affordable electricity would assist in lowering production costs, thereby benefiting the public. He stated that rising imports and a widening trade deficit posed a serious threat to economic growth and must be addressed urgently.
READ MORE: KATI demands withdrawal of electricity, petrol price hike
Mian Anjum Nisar said that the recent increase in fuel and electricity rates will add to the miseries of the businessmen, who are already feeling the heat of runaway inflation. He said that increase in fuel prices and tariff rates would also bring about another flood of inflation in Pakistan as it would increase the cost of doing business in the country.
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FPCCI welcomes electricity tariff reduction
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has welcomed the decision of Prime Minister Imran Khan to provide relief industries by reducing electricity tariff.
Mian Anjum Nisar, President FPCCI, at a press conference on Tuesday lauded the bold initiative to reduce electricity tariffs for SMEs and Industries.
He said for a long, FPCCI was striving for a balanced electricity tariff for industries to compete with the regional trade.
The struggle is now fulfilled and the government realized the issue. “The reduced electricity cost will also positively impact the local markets and will create a tendency to overcome inflation and lead to the spur of economic growth,” he added.
Mian Anjum Nisar President FPCCI on behalf of the business, trade, and industries extend heartily congratulation for such a business friendly decision for the industry.
Prime Minister Imran Khan during a post-cabinet meeting media briefing announced reduced energy costs for industrial sector. The prime minister said that from November 1, the additional electricity used by SMEs up to June 30, 2021, will be sold at 50 percent lower the cost.
The prime minister also said that even the large industries, will pay reduced electricity costs at all times, without any concept of off-peak hours. The prime minister admitted that the industry was severely impacted during the lockdown period and it was now essential that industrial sector should be supported to perform well.
Mian Anjum Nisar also addressed the business, trade, and industry sectors to avail full benefits of this facility and play their part to increase production and volume of export.
Present Government has already decreased the policy interest rates and established a network of economic zones as Karachi Export Processing Zone, Risalpur Export Processing Zone, Sialkot Export Processing Zone, Gujranwala Export Processing Zone, Khairpur Special Economic Zone, Rashakai Economic Zone, Gadoon Economic Zone, Hathar Economic Zone, Quaid e Azam Business Park. And special economic zones SEZ National Science & Technology Park, Islamabad, JW-SEZ China-Pakistan SEZ Raiwind in Punjab, and Dhabeji SEZ in Sindh.
This is the high time to put all energy and efforts into the enhancement of the socio-economic development of the country. Electricity relief packages will ultimately provide support in decreasing expenses and industries will be able to compete with their regional contemporaries.