‘Industry needs competitive energy rates’

LAHORE  -   Pakistan Business Forum (PBF) on Tuesday said that attempts to stem the growth of the energy circular debt through tariff increases was not a sustainable way. Chairman PBF Punjab Muhammad Naseer Malik said fifty six percent of direct taxes are paid by industry, which is more than twice its share in the GDP. Denying industry competitive energy tariffs undermines its positive contribution to the economy. “Tariff increases may provide short-term relief to the fiscal deficit but undermine the health of the economy,” he added. Muhammad Naseer Malik further stated that since 2013, we have been adding capacity by persuading companies that they will get payments against capacity addition regardless of whether the electricity is sold or not. This condition may have been the ground realty of that time when the country needed more capacity and this was the only way of gaining investors’ confidence but now the policy should be revisited. Capacity payment is fixed while the energy price varies. Imported fuel is another reason for the circular debt. Besides, all payments including the capacity payments are linked to the US dollar. As a result, when the rupee loses value, the burden of circular debt rises. Besides, transmission losses and bill recovery failure are contributing to the liability as the GDP rate decreases with the increase in cost of electricity.