Businesses denounce January power tariff hike, warn of economic fallout

KARACHI: Business leaders on Tuesday denounced the power regulator's decision to raise electricity tariffs by Rs7.0562 per kilowatt hour, saying it would hurt the economy and the poor.

The National Electric Power Regulatory Authority approved the increase as an adjustment for fuel charges in January 2024, which will be reflected in March 2024 bills. The Karachi Chamber of Commerce and Industry said the move was "totally unacceptable" and would raise costs for households and manufacturers.

"All the citizens as well as members of the business community have already paid their bills for January 2024," KCCI President Iftikhar Ahmed Sheikh said in a statement. "NEPRA has advised taking variation in fuel charges for January 2024 under a separate head in bills of March 2024, which would not only affect budgeting of almost all the households but also terribly raise the costs for the month of March for all types of manufacturing units all over the country."

Sheikh said the business community was already battling hard for survival due to the high cost of doing business which has made Pakistani goods uncompetitive in the international markets and unaffordable for the common man.

He urged the government to intervene and stop NEPRA from "fearlessly and mercilessly" raising tariffs without considering the impact on the economy, trade, industry and the lives of poor masses.

“The unbearably high electricity bills have created a terrifying situation where the industrialists find it unfeasible to keep their units operational, hence, many SMEs have completely closed down whereas the industries have also curtailed their activities, which has resulted in making thousands, in fact millions of people jobless all over the country.”

Sheikh warned that many people would resort to defaulting on their bills, confronting the power utility staff, using illegal connections or protesting on the streets, which would create law and order problems and ruin the social fabric.

“The circular debt continues to go up and has crossed Rs5.73 trillion only because of the fact that efforts were hardly being made to deal with theft and line losses. They are trying to avert further increase in circular debt by raising the tariffs which is not a wise move as the hefty bills would further worsen the situation by encouraging the public to go for theft all over the country,” he added.

The Pakistan Business Forum also rejected the tariff hike, saying it would put an additional burden of Rs70 billion on the people of Pakistan.

PBF vice president Ahmad Jawad said the power distribution companies had incurred losses and inefficiencies of Rs77 billion in the first half of 2023-24, up from Rs62 billion in the same period of 2022-23.

"Discos under recoveries reached Rs149 billion during first half of 2023-24 as compared to Rs62 billion during the corresponding period of 2022-23; however, their cumulative under recoveries stood at Rs236 billion as of June 30, 2023," Jawad said.

"The policy makers sitting in Islamabad are failing to read the writing on the wall. Out-of-the-box thinking is required to emerge from the economic crisis." Jawad said if energy prices are not slashed by approximately 43 percent, various industries may not survive as high input costs would lead to the loss of export markets, and eventually trigger industrial closures.

"Pakistan, already reeling from skyrocketing inflation for the last three years, is facing a similar challenge. International competitiveness of Pakistan’s textiles and apparel exports is being continuously eroded by ever-increasing energy prices that, on average, are over twice as high as those of competing countries. One should understand that price hikes have made Pakistani exporters uncompetitive in the export markets by a large margin."