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January 24, 2020

Power Division clarifies contents of Aptma letter on unjustified excess billing

National

 
January 24, 2020

ISLAMABAD: Spokesperson of Power Division, while clarifying the content of letter by Aptma regarding the Textile Sector, in a statement said that the federal government, vide SRO No 12(I)/2019 dated January 01, 2019, provided an incentive to a specific category of consumers. They are zero rated industrial consumers, to the effect that, in respect of electricity base tariff for XWDISCOs recommended by Nepra and notified by the federal government vide SRO Nos 01 to 10(I)/2019 dated January 01, 2019 and SRO Nos 11(I)/2010 dated January 01, 2010 for K-Electric, such category of consumers shall make payment up to the rate of 7.5 cents/kWh (the “Concessionary Rate”), says a press release.

The difference between the base tariff and the concessionary rate was to be plugged in/contributed by the government per the notification for rationalisation of process of payment of subsidy. This aspect is clearly spelt out from a bare reading of SRO No 12(I)/2019 dated January 01, 2019.

At present, approximately benefit of Rs7.30/kWh is being given in lieu of the Peak Units and Rs1.50/kWh is being given in lieu of Off-Peak Units to all such consumers, strictly in terms of SRO No 12/(I)/2019. This subsidised regime is continuing and not been withdrawn.

For completeness, it is pointed out that upon issuance of the SRO No 12/(I)/2019, Aptma made various representation to the government with respect to further subsidy by way of capping of the concessionary rate as the only tariff payable by zero rated industrial consumers. The representations made by Aptma and the financial implications of the matter were discussed with the Finance Division and other concerned divisions, including, the Ministry of Commerce and Textile.

On account of no budgetary allocation for the purposes of the demanded relief in FY 2018-2019 or in the current financial year, the Finance Division communicated that being pass-through items, the same should be duly recovered as per tariff notifications from industrial consumers, as the subsidy is only meant for furtherance of pro-poor government policy.

Accordingly, after due deliberations between various government division, and approval from the federal government, it was declared that the erstwhile zero rated sectors would be notified as “Export Oriented Sectors”, which will continue to remain entitled to the above subsidised package.However, further additional subsidy claimed in the context of all remaining components of cost/price of electricity would be recoverable from such consumers per the notified tariffs, after incentivising the base rate through the concessionary rate as explained above, which differential is already being provided by the government from the allocated subsidy.

In addition, this sector is also getting concessional rate of gas supply. It is quite clear that base tariff of 7.5 cents is being maintained for the “Export Oriented Sectors” and to maintain the base tariff, an element of subsidy and cross subsidy has been introduced.

The additional costs reflected periodic adjustment are not covered by such subsidies and if they are not charged to the “industry”, the burden would have to be shared by the domestic, agricultural and commercial consumers. While the GoP is fully committed to promote export for which the base tariff is being maintained, it is important to protect the aforementioned sectors from the burden of future cross subsidies.

However, when The News contacted, APTMA’s Executive Director Shahid Sattar, who wrote the letter to Energy Minister Omar Ayub Khan, termed the clarification of the Power Division is not satisfactory arguing it carries no weight as practically the industry is getting excess bills because of imposition of all additional charges such as financial cost surcharge, Neelum-Jhelum surcharge, tax, fixed charges, QTA and fuel price adjustment in the electricity bills for export industrial consumers in addition to 7.5 cents per unit.

Mr Sattar said that bills of Iesco for the period of December 16, 2019 to January 2020 have now been received, which are inflated bills because of inclusion of all charges QTA and fuel price adjustment.