Businessmen Panel calls for lessening tax burden on power sector

Web DeskWeb Editor

28th Aug, 2021. 04:57 pm

LAHORE: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Businessmen Panel has called for lessening the burden of heavy taxes on the power sector, as it has pushed the electricity tariff on the higher side for the already burdened trade and industry, a statement said on Saturday.

Appreciating the continuation of electricity and gas subsidies for export-oriented sectors, FPCCI Businessmen Panel chairman Mian Anjum Nisar demanded the same competitive energy tariffs for the domestic industries to capture the global market.

The general sales tax worth Rs85 billion have been paid to the Federal Board of Revenue (FBR), he said, adding that the GST billed by independent power producers (IPPs) stood at Rs117 billion, whereas the GST billed to the consumers stood at Rs202 billion.

In addition, the government was collecting Rs22 billion taxes on fuel adjustment charges. The total amount of fuel adjustment charges with taxes stood at Rs383 billion, Nisar said, adding that keeping in view the heavy burden, the rationalisation of general sales tax and other taxes in the power sector was a must to reduce the price of electricity.

The Businessmen Panel chairman also said the recent approval of Rs68 billion for the extension of concessional rates of electricity and re-gasified liquefied natural gas (RLNG) was important for sustained increase in exports but this benefit should also be provided to the local industry to support the industrial growth.

He endorsed the proposal of the Power Division for early termination and buyout of the oil-based IPPs with the generation capacity of 3,300MW and 5 per cent average annual dispatch factor.

Their fuel cost amounts to Rs13/unit. However, the consumers were paying Rs60 billion/annum on account of “take or pay” capacity charges, the impact of which on the consumer tariff, was 6 paisas/unit. The consumers would be paying Rs450 billion in aggregate on account of capacity charges over the remaining average seven years of their contracts.

The BMP chairman said the electricity theft in the power sector of Pakistan continues to hit the entire energy chain in the current financial year 2020/21, leading to the worst energy crisis.

The higher rate of electricity theft was the major reason for the rising circular debt that has crossed Rs2.5 trillion-mark this year. The power distribution companies in Khyber-Pakhtunkhwa and Sindh are still bleeding from the highest rate of electricity theft.

The Peshawar Electric Supply Company recorded 35 per cent losses in the financial year 2020/21. Hyderabad Electric Supply Company faced 28 per cent and Quetta Electric Supply Company 22 per cent losses. Islamabad Electric Supply Company faced 9 per cent losses.

The average rate of electricity theft is 17 per cent in the current financial year 2020/21, which needs to be controlled at any cost, he added.

Nisar said that the country’s exports have shown positive growth, which is a vindication of the government’s policy to keep the wheels of the economy running during the Covid-19 pandemic.

The FPCCI’s former president said both the international and domestic confidence was increasing. The Covid-19 outbreak and the subsequent lockdown drastically damaged the world economy and Pakistan was no exception, which witnessed negative GDP growth last year.

However, due to some better policies adopted by the government, including relief in the markup rate helped minimise the economic losses.

Nisar called for continuation and consistency in long-term policies once it is announced, as changes and revisions hurt the industrialists’ plan of production and purchases and booking of orders.

 

Adsence 300X250