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FPCCI opposes withdrawal of power subsidy as move to hit 18m consumers

FPCCI opposes withdrawal of power subsidy as move to hit 18m consumers

ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry president Mian Anjum Nisar has opposed the government’s move of power subsidies’ withdrawal just for the revival of the stalled IMF programme, demanding rather substantial reduction in energy rates in line with the drastic fall in international oil prices.

FPCCI President said that the change in subsidies regime, amid increasing financial miseries on account of COVID-19, would hit at least 18 million consumers out of a total 27 million electricity connection holders across the country, as the cost of doing business has already increased manifold, leading to slowdown in economy and unemployment in the country. He called for taking decisions after consultation with the stakeholders in this regard, instead of depending solely on the available fiscal space. Resisting the hike of almost 110% in gas prices, he endorsed the decision of OGRA for rejecting the demand of gas utilities to increase gas prices rather reducing the rates by almost 6% for consumers, which is a good step.

He said that the gas companies had recently sought the huge surge in gas tariff by up to Rs622 per mmbtu, putting an additional burden of Rs290 billion on industrial as well as domestic consumers, leading to further jump in cost of production. He said that instead of covering losses and enhancing the efficiencies, the gas utilities of Sui Southern Gas Company and Sui Northern Gas Pipelines Limited were planning to shift their burden to the consumers.

The Ministry of Petroleum, through a letter, had already directed the gas companies to reduce UFG losses from 6.3% to 4%, cut profit from 20% to 15%, besides reducing transmission and distribution losses but the directives were not followed, he argued.

Mian Anjum Nisar said that exporters and manufacturers are already greatly burdened and crushed due to rising tariffs of electricity, gas, water and other essential sources of power, leading to high costs of doing business in Pakistan as compared to our competing countries. He said that change in subsidies regime would significantly increase burden of Punjab based consumers due to increased theft and losses in other three provinces.

According to reports, the government has already cut the power subsidies by 36% in the budget as against last fiscal year’s allocation of Rs226 billion because the government has allocated only Rs150 billion for power subsidies this year. The electricity subsidies allocations in the budget are 60% less than the demand made on the basis of current concessional regime of agriculture tube-wells and exporters.

FPCCI president called upon the government to take concrete measures and formulate effective policies to reduce the cost of doing business so as to jack up the country’s exports. The government should merge all taxes, duties and contribution etc and introduce one-window operation for one-time payment of all dues he suggested.

He said that the gas prices were required to be reduced further to pass on the benefit of lower international oil rates to consumers since the producer prices of gas were directly linked to global oil prices.

He said that the energy prices were retreating across the world but the gas prices were not being reduced in Pakistan. He said the value-added industry is contributing to its role in national exports in addition to providing jobs to millions of workers. But, increased cost of doing business was hurting industry which must be curtailed to get maximum share for Pakistan economy.

He said that the devaluation of Pakistani rupee against the US dollar was already hurting the growth of the economy and industry.