Chairman Businessmen Group & Former President Karachi Chamber of Commerce & Industry (KCCI) Zubair Motiwala, who attended yesterday’s NEPRA hearing on subsidy rationalization plan, has outrightly rejected the introduction of new category/ slab of protected consumers based on average consumption of less than 200kWh.
In a statement issued, Chairman BMG stated that the decision to introduce new category/ slab of protected consumers has been taken to reduce the volume of subsidy but this will terribly affect the lives of the poor masses who were hard hit due to the outbreak of COVID-19 pandemic since the start of 2020 and continue to suffer to date as the virus was still haunting the economy, businesses and lives of the poor masses. After implementation of this decision, around 8 million consumers will be out of the subsidy net in the first phase, out of a total of 22 million electricity consumers who were presently getting the subsidy. This sharp reduction is going to plunge the poor segment of society into more severe crises, he opined.
He said that it was appalling to observe that if at any point in time, the consumption exceeds 200 units during previous six months, then the said consumer would not be classified as protected consumers for the billing month even if consumption is less than 200 units. It would be a major strain on the poor consumers who struggle every month to pay the electricity bill as there would be no way left for them to manage their bills.
Chairman BMG stated that it was impractical and unjust to assume a slab based on 6 months average when the consumption widely varies with seasons, climate and occasions. In Karachi, the summer seasons lasts usually to seven months and during the recent years, heat waves have become a common phenomenon whereas the consumption usually rises during festivals and family events. Residents on rent arrangements commonly tend to change their houses which would burden the genuine poor consumers with higher tariffs for six months no matter how much they control their consumption, if their previous dwellers were consuming more than 200kWh, he explained.
He stressed that it was not the right approach, instead we demand that the government should mandate the DISCOs including K-Electric to provide solar panels with inverter to domestic consumers for day time self-power generation and charge the cost of the equipment in their bills over the subsequent two years’ time. “This will reduce their consumption of electricity, resolve the issue rising circular debt, reduce oil import bill and will be a win-win situation for everyone.”
Zubair Motiwala was of the opinion that the whole exercise to burden the lifeline consumers was being carried out on the directives of IMF wherein Pakistan, being in the IMF program, has to follow IMF directives and they intend to increase much more tariff of electricity. “The government has to realize that IMF was not acquainted with ground realities. In today’s scenario, any further increase in KE tariff would only encourage more theft and pilferages.”
He also stressed that the government has to understand that Power Companies have been recommending an easy way of increasing the rates and reducing the subsidies. “They don’t want to put more efforts to reduce theft and curtail the subsidies. They don’t want to reduce the technical line losses. They don’t want to introduce the modern ways of collection of charges like smart meters, wireless meters to large consumers and reduce supply by assisting small consumers in acquiring solar panels which would be the better way cope with the situation.”
He further questioned that what would be the net amount after taking this step which would be collected from lifeline consumers and what burden was being discussed as the amount was not disclosed during the NEPRA hearing that clearly indicates that proper homework has not been done. “If you are putting up billions of rupees of burden, it is going to be a big problem for small consumers.”
Furthermore, Chairman BMG stated that if this subsidy, which was actually a cross subsidy being charged from the industry, was taken away what would be the target utilization of this imposition. “Would that reduce the tariff of the industry which is burdened heavily with so many other factors or this will only go towards reducing the circular debt”, he asked.
He also reminded the government that circular debt has been created because of the high price purchase of power from IPPs without realizing the impact on circular debt which was bound to be created as the difference between the sale price and buying price was huge that needs to be rationalized or should be met from the coffers by the government through budget and not through cross subsidization.
“The government has to understand that the industry, manufacturing sector and all other sectors cannot bear more than what their competitors were paying that means that this whole exercise of not only yesterday’s NEPRA hearing but also the entire program of two years would actually plunge the industry in an unviable situation. The government has to understand that price being borne by the competitors has to be taken into consideration and then only we can have a tariff which is acceptable and compatible with the competitors.”