The government and concerned authorities should release the allocated funds for incremental benefit subsidy electricity to industrial units of Karachi, mainly Small and Medium Enterprises (SMEs), to prevent the closure of large-scale economic activities and layoffs in different sectors of the country’s commercial and industrial hub, said President Federal B Area Association of Industries Syed Raza Hussain.
He pointed out that the government released power subsidies to industries of different cities. Still, it only paid Rs. 9 billion to Karachi subsidies against the allocated Rs. 42 billion as part of the relief to industries from the COVID-19 economic downturn during FY20-23. The financial relief was discontinued due to disagreements between the industries and K-Electric.
The power utility company wants the federal government to release funds for these subsidies to their account first. In contrast, the government directed KE to release the funds first and recover the amount as reimbursement.
This situation resulted in an uncompetitive pricing environment because the electricity unit cost was Rs. 20 higher than that of the industries of different cities. To retain their market presence, the industries of Karachi continued to supply their buyers with losses, hoping to overcome the high-cost losses from the incremental benefit subsidy.
At present, NEPRA directed K-Electric to release the remaining allocated funds to the Karachi industries after the tribunal’s decision in favor of the industries.
Raza Hussain mentioned that industrial production and economic activities are decreasing in Karachi as the current electricity cost has spiralled up unabated, resulting in layoffs in different industrial zones. The immediate transfer of subsidies may aid industrial units in reviving their production and economic activities, underscoring the gravity of the situation.
He called on Federal Minister for Energy Owais Leghari and Minister of State Muhammad Ali to address this discrimination urgently, urging the removal of specific surcharges imposed exclusively on Karachi consumers as they are unjustified. The need for fair treatment in subsidy distribution cannot be ignored.
President FBATI proposed increasing the gas supply to K-Electric to reduce electricity costs, as the current generation from RLNG is highly expensive. The delay in subsidy distribution and high electricity costs have led to warnings from industrial leaders that protests, including sit-ins and demonstrations, may be inevitable if the situation is not resolved soon.
