Punjab industry to pay additional Rs80 billion

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THE NATION, LAHORE, 03rd OCTOBER 2013:- After power tariff hike of around 61 per cent on average for industry the additional revenue collection from the industry is estimated to be around Rs100 billion while only Punjab industry will contribute more than Rs80 billion due to discrimination in energy distribution among all provinces.
This was stated by the newly elected APTMA Punjab president SM Tanvir in briefing to a selected media group here on Wednesday.
He claimed that industries in other provinces are getting cheap electricity through own gas plants and also going for stay orders against tariff increase on constitutional grounds.
He said that tariff increase is only to impact Punjab based industry which is facing energy supply disruption, rejecting increase in electricity tariff and move to deprive Captive Power Plants (CPPs) from gas supply. He said that government has failed to boost revenues; it is not bothered about tax reforms and has decided to conveniently tax industry to raise funds which is not the best solution.  He said that the government can focus on controlling the massive electricity theft, collecting bills from chronic defaulters, and introduce reforms to improve efficiency of the ailing power sector.
A detailed presentation, based upon published facts and figures of NEPRA and other official sources, was made by the Director Energy to a select media group.
Tanvir said electricity tariff for industry has been raised from Rs9.18 per KWh to Rs14.18 per KWh from 1st of September onwards, or Rs5.63 per KWh, 61%. It was told to the meeting that absorbing such an abnormal raise in tariff is impossible for paying customers of the industry, he added.  It was further pointed out that Pakistan’s industry is being provided with 2170MW from PEPCO network except the KESC, which comes to around 80 percent of the industrial consumption. Out of it, Punjab is consuming 1800MW, followed by 145MW by Sindh and 227MW by industry in the KPK. Due to unprecedented tariff increase, the industry on PEPCO network has been additionally burdened with Rs100 billion. As per the NEPRA report, the six months weighted average generation cost of energy from hydel, RFO, gas and other sources was Rs7.61 per KWh uptil June 2013, followed by Rs6.76 per KWh for the months of July and August respectively. An abnormal increase in industrial tariff to Rs14.81 per KWh against the generation cost of around Rs7.61 per KWh is uncalled for.
It was further said that the textile industry is predominantly export-oriented with zero line losses on independent feeders and paying 100 percent electricity bills. Also, the line losses of Punjab-based DISCOs are less than the DISCOs operating in other parts of the country, as the line losses of LESCO, GEPCO, FESCO and MEPCO is 12%, 10.5%, 10.8% and 15% respectively with a recovery ratio of 96%, 98%, 98% and 97% respectively.
The situation on ground and the approach of tackling system inefficiencies by raising tariff and punishing the efficient consumers may lead to wiping out of industry from the province of Punjab. The energy tariff in the region is around 10 cents per KWh as against 14 cents per KWh in Pakistan. The industry cannot pass on the impact to the buyers of its products in the international marketplace.
Further, it was clarified that the industry-based Captive Power Plants (CPPs) utilize 800MMCFD gas to generate 3200MW countrywide with average efficiency of 40%. It will be a zero sum game if gas supply to the CPPs is taken away for generation of electricity through IPPs and GENCOs and giving back electricity to the industry with 22% line losses. Especially, efficiency of four IPPs is hardly 45% with another 24% of GENCOs; it would not be wise to deprive the industry from in-house electricity generation capability, as it would tantamount to a death-knell for the industry at large. The industry is sustaining operations to generate 15 million jobs and $13 billion exports.

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