PBF calls for cheaper electricity, tax cuts

LAHORE: Pakistan Business Forum (PBF) on Saturday called for a renegotiation of capacity charges and a halt to sales tax on electricity bills, as the country faces soaring power costs and a looming energy crisis.

PBF Chairman Punjab, Muhammad Naseer Malik, said households and businesses are paying exorbitant prices for electricity, which is hurting their profitability and competitiveness.

He cited the latest forecast by the National Electric Power Regulatory Authority (NEPRA), which shows that consumers will bear 68 percent of the costs for fixed capacity payments in the fiscal year 2023-24, mainly benefiting coal plants.

Malik said the high dependence on imported fuel, especially petroleum, poses a risk of volatility and strain on the foreign exchange reserves.

The end consumer tariff had been increased from July 1, 2023, without any clear solution or strategy in sight, he added.

"We have serious reservations about the recent hike in electricity prices, because it is debilitating both for residential and commercial consumers, and inflation is already affecting negatively the businesses and rendering them unprofitable," Malik said.

He said that residential consumers are unable to pay their electricity bills across the country, and on average, they pay 15 percent to 20 percent extra in the form of various adjustments and surcharges.

Malik said that residential consumers pay an extra 20 percent to 25 percent in the form of taxes and duties, and are subjected to pay Rs. 35.57 per kWh for off-peak load and Rs41.89 per kWh for peak load.

"Commercial consumers are also charged with further tax and extra tax in addition to electricity duty, sales tax and income tax. In current bills, commercial consumers are paying 37 percent to 40 percent of the total electricity charges in taxes and duties."

PBF Secretary General Punjab, Arif Ehsan Malik, said that a better and more viable option should be explored to curb circular debt and provide affordable electricity to consumers.

He suggested that the government should negotiate with power plants to increase the debt payment period to reduce the capacity component in the power tariff.

Ehsan Malik also urged the government to halt the imposition of sales tax for six to eight months to reduce the cost of doing business.

He warned that businesses could not survive with the provision of unaffordable electricity, and that economic growth would be jeopardized and many small and medium enterprises would shut down.

"Our profits are already marginalized as a result of reduction in sales due to record inflation in the country."