Power consumers to be charged Rs1.8 bn to pay KP loan

ISLAMABAD: The electricity consumers, who are already paying 0.43 per unit in the tariff as debt servicing of the loans of power sector entities borrowed for the projects under their respective business plans, will now pay an additional Rs1.8 billion under the head of the interest for the loan of Rs25 billion Wapda has borrowed to pay Net Hydel Profit (NHP) to Khyber Pakhtunkhwa (KP).

The Ministry of Water and Power has sent a summary to this effect to the Council of Common Interests (CCI) asking for approval of the recommendation under which electricity consumers will pay mammoth amount of Rs1.8 billion as interest in the power tariff against the loan of Rs25 billion borrowed by Wapda to pay the installment of NHP to KP.

The CCI meeting will be held tomorrow (April 28) with prime minister in the chair and it is mostly like to approve payment of Rs1.8 billion in the head of interest by the consumers.

Earlier, Wapda with recommendation of Ministry of Water and Power had submitted the petition with Nepra seeking the inclusion in the tariff the Rs1.8 billion in the head of debt servicing against the loan of Rs25 billion. But the regulator did not accord approval to it saying the Net Hydel Profit was approved by the CCI and this issue would also be approved by it and in case the supreme body approves it, Nepra will have no objection.

Since 2013, the consumers in their electricity bills have heavily been taxed as they are paying three kinds of taxes namely extra tax, further tax and 5-7.5 percent increase in sales tax. They are also paying three kinds of surcharges, but the power sector continues to be a black hole in Pakistan’s economy. The monster of circular debt is very much there as it stands at Rs385 billion as per the government figures.

The electricity consumers are not only paying Rs15-20 billion a year in the head of debt servicing of the loans borrowed by the power sector and parked in the Power Holding Private Limited (PHPL) but the principal amount of the loans are still there which now hovers at Rs367 billion.

Apart from it, the government fleeces Rs1.53 per unit from every electricity consumers that include Rs1 in the head of tariff rationalisation surcharge, Rs0.43 per unit as financing cost surcharge and Rs0.10 as Neelum-Jhelum surcharge.

In addition, according to the document shared with Parliament, the consumers have also been paying 17 percent General Sales Tax (GST) since July 7, 2013 as earlier the GST was charged at the rate of 16 percent.

The story of miseries of consumers does not end here, as extra tax of 5 percent is also being charged to the commercial and industrial consumers which are not registered in active taxpayers list of FBR. The 5 percent extra tax is levied once the electricity bill exceeds Rs15,000 a month from July 2013.

In addition, Further Tax is being charged at the rate of 1 percent to all consumers having no Sales Tax Return Number (STRN) from October, 2013 except domestic and agriculture.