Incremental benefit must be passed on to Karachi industrial units: FBATI

The government and concerned authorities should release the allocated funds on account of 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 commercial and industrial hub of the country, 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 but it only paid an amount of Rs. 9 billion to subsidies of Karachi as against the allocated amount of Rs. 42 billion as part of the relief to industries from COVID-19 economic downturn during FY20-23, but the financial relief was discontinued due to disagreements between the industries and the 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 electricity unit cost stood at Rs. 20 higher than the industries of different cities. In order to retain their market presence, the industries of Karachi continued their supplies to their buyers with losses, hoping to overcome the high cost losses from the amount of incremental benefit subsidy.

At present, NEPRA directed K-Electric to release the remaining allocated funds to the Karachi industries after the decision of its tribunal in favor of industries.

Raza Hussain mentioned that industrial production and economic activities are decreasing in Karachi as the current electricity cost spiralled up unabated, which also resulted in layoffs in different industrial zones. The immediate transfer of subsidies may aid industrial units in reviving their production and economic activities.

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.

He 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, President FBATI said.