The business community has rejected the introduction of a new category/slab of protected consumers based on an average consumption of less than 200kWh, a statement said.
Zubair Motiwala, who is chairman of the Businessmen Group and former president of the Karachi Chamber of Commerce and Industry (KCCI), attended the National Electric Power Regulatory Authority (Nepra) hearing, held on Monday regarding subsidy rationalisation plan, rejected the introduction of new category/slab of protected consumers based on an average consumption of less than 200kWh.
The BMG chairman said the decision to introduce new category/slab of protected consumers has been taken to reduce the volume of subsidy but this will badly affect the lives of the poor masses who were hard hit due to the outbreak of the Covid-19 pandemic since the start of 2020 and continue to suffer to-date, as the virus was still haunting the economy, businesses and lives of the poor masses.
After implementation of the decision, around eight million consumers will be out of the subsidy net in the first phase, of a total of 22 million electricity consumers who were presently getting the subsidy.
This sharp reduction is going to plunge the poor segment of the society into more severe crisis, he said, adding that it was appalling to observe that if at any point in time, the consumption exceeds 200 units during the previous six months, then the consumer would not be classified as protected consumers for the billing month even if the consumption is less than 200 units.
It would be a major strain on the poor consumers who struggle every month to pay the electricity bill, as there would be no other option left for them to manage their bills.
Motiwala said that it was impractical and unjust to assume a slab based on a six months average when the consumption widely varies with seasons, climate and occasions.
In Karachi, the summer season lasts usually to seven months and during recent years, heat waves have become a common phenomenon, whereas the consumption usually rises during festivals and family events. Residents on rent arrangements commonly tend to change their houses, which would burden the genuine poor consumers with higher tariffs for six months no matter how much they control their consumption, if their previous dwellers were consuming more than 200kWh, he said.
He stressed it was not the right approach, instead it is demanded that the government should mandate the distribution companies, including K-Electric to provide solar panels with inverters to domestic consumers for day time self-power generation and charge the cost of the equipment in their bills over the subsequent two years’ time.
“This will reduce their consumption of electricity, resolve the issue of the rising circular debt, reduce oil import bill and will be a win-win situation for everyone.”
Motiwala said that the whole exercise to burden the lifeline consumers was being carried out on the directives of the International Monetary Fund (IMF); wherein, Pakistan, being in the IMF programme, has to follow its directives and they intend to increase much more tariff of electricity.
“The government has to realise that [the] IMF was not acquainted with ground realities. In today’s scenario, any further increase in the KE tariff would only encourage more theft and pilferages.”
He also stressed the government has to understand that the power companies have been recommending an easy way of increasing the rates and reducing the subsidies.
“They don’t want to put more efforts to reduce theft and curtail the subsidies. They don’t want to reduce the technical line losses. They don’t want to introduce the modern ways of collection of charges like smart meters, wireless meters to large consumers and reduce supply by assisting small consumers in acquiring solar panels, which would be the better way to cope with the situation.”
Motiwala questioned what would be the net amount after taking this step, which would be collected from the lifeline consumers and what burden was being discussed, as the amount was not disclosed during the Nepra hearing that clearly indicates that proper homework has not been done.
“If you are putting up billions of rupees of burden, it is going to be a big problem for [the] small consumers,” he said.
Further, the BMG chairman said if this subsidy, which was actually a cross subsidy being charged from the industry, was taken away what would be the target utilisation of this imposition.
“Would that reduce the tariff of the industry, which is burdened heavily with so many other factors or this will only go towards reducing the circular debt?” He questioned.
He also reminded the government that the circular debt has been created because of the high price purchase of power from the independent power producers (IPPs) without realising the impact on the circular debt, which was bound to be created, as the difference between the sale price and buying price was huge that needs to be rationalised or should be met from the coffers by the government through budget and not through cross-subsidisation.
“The government has to understand that the industry, manufacturing sector and all other sectors cannot bear more than what their competitors were paying. That means that this whole exercise of not only yesterday’s Nepra hearing but also the entire programme of two years would actually plunge the industry in an unviable situation.”
“The government has to understand that price being borne by the competitors has to be taken into consideration and then only we can have a tariff, which is acceptable and compatible with the competitors,” he added.
