Electricity tariffs should be fixed on a regional basis: Mian Zahid Hussain

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The Chairman of National Business Group Pakistan, the President of the Pakistan Businessmen and Intellectuals Forum, the President of All Karachi Industrial Alliance, the Chairman of the FPCCI Advisory Board, and the President and former provincial minister, Mian Zahid Hussain, said on Wednesday that the country’s economy cannot develop without ending unnecessary political interference in the energy sector.

He said this sector has become an example of poor planning, wrong policies, corruption, incompetence, and nepotism.

Mian Zahid Hussain said that violation of merit and political decisions based on personal interests have made the energy sector challenging for the people and the business community, and it seems impossible to deal with.

Talking to the business community, the veteran business leader said the country has a much higher electricity generation capacity than required. Still, due to a lack of certification, electricity consumption is very low. He added that Pakistan has to pay Rs 2100 billion in annual capacity charges, the burden of which the public bears in the form of Rs 21 per unit.

The installation of such a large number of IPPs was prompted by the country’s economic growth pace from 2013 to 2018, which was estimated to increase the electricity demand.

Mian Zahid Hussain said that some IPPs owners overstated the plant’s cost and charged higher prices by showing additional costs through incorrect figures. The bureaucracy turned a blind eye to inaccurate information, which has made the energy sector’s problems very complex.

The basic assumption in installing IPPs was that Pakistan’s economy would grow at a constant rate of 6 percent. However, during the subsequent government’s tenure, this rate came down to an average of 2 and a half per cent, and now the entire nation is suffering the consequences.

Mian Zahid Hussain said that the FPCCI has continuously expressed concern in this regard, so the agreements of some IPPs have been cancelled, and negotiations with the rest have been completed. A significant reduction in electricity prices will likely be seen by April.

Immediate reforms and realistic planning to prevent deterioration are the permanent solutions for the power sector. Attention should be paid to the transmission and distribution system, as its breakdown has rendered the entire sector ineffective.

The business leader said that the problem must be resolved shortly. The costs of constructing transmission networks are very high, and they cannot be recovered through a tariff hike as electricity bills are already skyrocketing.

Mian Zahid Hussain added that electricity tariffs are based on regional production and expenditure in many countries. In contrast, emphasis is placed here on a uniform tariff instead of a regional one.

 

Currently, local gas production is decreasing day by day. He said there is a need to work on new gas discoveries to reduce dependence on expensive imported RLNG.

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