Rs2.6tr power sector liabilities: Power consumers to be billed surcharge to collect Rs335bn in FY24

ISLAMABAD: The government has started charging the Financing Cost (FC) surcharge of Rs3.23 per unit from end consumers from July 1, 2023, to mop Rs335 billion to finance the power sector’s debt and liabilities which stands at Rs2.6 trillion. In addition, they will also continue to pay Tariff Rationalization surcharge which is at Rs0.47 per unit.

Shockingly, the consumers – active taxpayers residing in the rented houses who have received electricity bills of more than Rs29,000 in July (mainly because of the high electricity tariff) have been charged income tax too, according to the consumers in Islamabad bringing them under great burden.

As far as the FC surcharge is concerned, the government would charge FC Surcharge at Rs3.23 per unit from July 1, 2023, in light of the NEPRA decision taken on March 30, 2023. But from July 1 to October 30, 2023, the lifeline consumers who utilize 50 units will pay no surcharge.

However, from July 1 to October 30, 2023, protected and residential non-protected consumers using up to 200 units, and non-protected residential consumers who use electricity up to 300 units per month and agriculture tube wells will pay Rs1.43 FC surcharge per unit and this facility for the said four categories will be available till October 2023. Other categories will pay Rs3.23 per unit as the FC surcharge till October 2023. And from November 1, 2023, to June 2024, residential protected consumers who utilize 200 units per month alone will pay Rs1.43 per unit as FC shortage till June 2024 but all the categories will pay an FC surcharge at Rs3.23 per unit.

Apart from it, the consumer also pays the capacity charges built into the base tariff. In the current fiscal 2023-24, the consumer is expected to pay Rs4.48 per unit as capacity charges. The consumers have paid in the last fiscal year 2022-23 almost over Rs1.2 trillion which will swoop upward in the current financial year 2023-24 up to Rs2.2-2.5 trillion. The country’s installed capacity stands at 45000 MW, but the government has geared up endeavours to install more power plants knowing the fact that in the years to come capacity charges will increase manifold to haunt the masses.

The consumer also pays the monthly fuel charges incurred for the generation of electricity as fuel cost is a pass-through item.

This is how the end electricity consumer in Pakistan is virtually being fleeced to cover up the unending inefficiencies in the power sector as apart from paying the actual cost of electricity, tariff rationalization, and financing cost surcharges, electricity duty, PTV license fee, GST, income tax, extra tax, further tax and sales tax.

Though industrial consumers pay additional extra and further taxes, residential consumers do not pay extra and further taxes, but pay the remaining duties, taxes, and surcharges.

Electricity Duty, a provincial duty, has been levied to all consumers ranging from 1.0 percent to 1.5 percent of Variable Charges, General Sales Tax (GST), is levied under Sale Tax Act 1990, on all consumers at the rate of 17 percent of the electricity bills. Now the time has come for PTV management to come up with its own business plan to stand on its own feet. It is quite an injustice to the consumers to share the financial burden of PTV at a time when the masses have other options available to equip themselves with the latest news through other private channels, as well as the social media world. The private sector is entertaining through better drama and sports coverage.

Income Tax is charged to consumers at various rates depending upon applicable tariff and the amount of electricity bill and 5 percent to commercial consumers on bills up to Rs. 20,000 and 7.5 percent on bills exceeding Rs. 20,000.

Further Tax is being charged at the rate of 3 percent to all consumers - having no Sales Tax Return Number (STRN) except domestic, agriculture, bulk consumers, and street light connections. Income Tax is charged to consumers at various rates depending upon applicable tariff and the amount of electricity bill and 5 percent to commercial consumers on bills up to Rs20,000 and 7.5 percent on bills exceeding Rs20,000.

One consumer, Mohmmad Ilyas while talking to The News said:” I received the electricity bill in the month of July 1, 2023, at Rs2,9819 against the use of 685 units. My meter is ToU. The actual cost of the electricity I received in the bill is Rs19,980. The government has mopped from me in the shape of surcharges, taxes, and duties an amount of Rs 9,235 which is 31 percent of the total bill. This is too much. I am an active taxpayer, but ISECO imposed an income tax of Rs2,028 which is sheer injustice. The government has collected from me in the July bill Rs2616.70 in the form of FC surcharge and Rs321.20 RT surcharge, Rs35 PTV fee, Rs 4,123 as GST and Rs108 as GST on FPA and Rs602 as a fuel price adjustment.”

The spokesman of the FBR, when contacted, said that if the electricity bill is received in the name of the owner of the house who is a non-taxpayer, and the bill exceeds Rs25,000 per month, then the electricity bill will be subjected to income tax even if an active taxpayer is residing in the rented house and paying bills.

But the tenant must deduct that amount from the rent. However, the Power Division spokesman said that if the active taxpayer was residing in a rented house and the owner of the house is a non-taxpayer, then he (the active taxpayer) must upload NIC details on the PITC website and they will not be charged income tax from next month.