Immense business expenses are dangerous for trade and industry!

ISLAMABAD (Reuters) - The high cost of doing business has proven dangerous for Pakistani industry, discouraging investment in both capacity and potential, the business community said on Sunday, calling for a relief from heavy taxes on the energy sector.

In a joint statement issued here, Nasser Hamid, Senior Vice Chairman, Pakistan Industrial and Traders Associations Front and Javed Siddiqi, Vice Chairman, condemned the National Electric Power Regulatory Authority (NEPRA) which shifts the burden of energy distribution companies' inefficiency to consumers by increasing tariffs under the Fuel Charges Adjustment (FCA) by Rs. 5.94 per unit in March 2022. It will be received through electricity bills.

 Nasir Hamid said the continued hike in power prices on the request of fuel adjustment led to higher power prices and higher costs of trade and industry than ever before.

According to NEPRA's notification, an increase of Rs. 5.94 per unit due to FCA for January 2022 will be imposed by energy consumers through the Electricity Bill for March 2022, placing an additional burden of about Rs. 58.5 billion on consumers. Similarly, this increase in the price of electricity of Rs. 5.94 per unit will be applicable to all consumer categories in all EX-WAPDA power distribution companies.

Javed Siddiqui said the regulatory authority had earlier increased energy prices by Rs 3.09 per unit in the FCA's December 2021 account, which put an additional burden of Rs 30 billion on energy consumers as against more than 8.5 billion units of power used in December last year. He asked the government to close all costly oil power plants to ensure affordable energy for consumers.

He regretted that the previous Government had not focused on the restoration and maintenance of old power plants, which had led to numerous regime restrictions, causing serious damage. According to the data, the total power generated in January was 8,797 gwh at a total price of Rs. 107.5 billion, which is Rs. 12.2199 per unit. Net electricity provided to DISCOs totaled 8,420.73 gwh with transmission loss of 330.85 gwh.

Data provided to Nepra shows that the most expensive sources of power generation, including high-speed diesel (HSD) and residual fuel oil (RFO), were used more than in previous months, which also led to higher overall cost of production, while lower cost (renewable) shares fell significantly during the month. Interestingly, the RLNG based energy segment has also declined significantly.

Coal had the highest share of the energy source in the total pie. Coal-generated power was 2,916.7 gigawatt hours (or 33.15 pcs) at a cost of 14.1049/unit. The cost was also very high due to high prices in the international market. This was followed by local natural gas and nuclear sources at 14.37 per cent (1,264 gigawatt hours) while gas charges amounted to Rs. 7,747 per unit.

The furnace-based power was generated from about 1,238.11 mw hours (14.07 pc) with a unit cost of Rs 22,807. The energy generated from imported LNG was 626 MW hours at a cost of Rs 16,703 per unit, or 7.12% of the total production. HSD based power was generated at a cost of Rs 25.98/unit from 592 MW hours. Interestingly, due to normal water shortage in dams in winter, hydro power generation in January was only 512.94 mw hours, or 5.83 per cent.