Brutal Taxation & Costly Electricity Tax Notices to Small Traders & Small Industries Condemned Asif Sakhi, VP FPCCI

Karachi: Mr. Asif Sakhi, VP FPCCI, has said that the apex body condemns tax notices of PKR. 60,000 per month to small traders and industries. The business, industry and trade community is looking forward to Tajir Dost Scheme (TDS) to facilitate small traders to get registered in the taxation system; and, get the perks out of being in the system – not the other round, he added.

It is pertinent to note that all the important associations of small traders, small industries and shopping centers of Karachi gathered under the auspices of FPCCI at Federation House to highlight the burgeoning issues of brutal tax notices and unbearable electricity tariffs due to the capacity charges of independent power producers (IPPs).

Mr. Asif Sakhi, VP FPCCI, demanded that unnecessary tax notices are causing unrest and harassment among the small traders and small industrialists; and, should be withdrawn in interest of national economy. Small traders want to be in the system; but, they cannot agree to undue and unfair taxes.

Mr. Asif Sakhi, VP FPCCI, has said that federal government should renegotiate all agreements with Independent Power Producers (IPPs); and, procure electricity for the national grid from cheaper and cost-effective sources – without any strings vis-à-vis capacity charges. To top it all, 52 percent IPPs are owned by the government and their power purchase agreements (PPAs) can be restructured in a short span, he added.

Mr. Asif Sakhi, VP FPCCI, informed that exorbitant and unbearable electricity tariffs have led to widespread industrial closures and massive job losses. There is an installed generation capacity of over 40,000 MW; while peak demand and transmission capacity is merely 25,000 MW – resulting in a significant excess and underutilized generation capacity, he added.

Mr. Sakhi apprised that PKR. 2 trillion capacity payments to 40 companies are paralyzing the national economy; and, IPPs continue to receive payments in the name of capacity charges even in the instances when there is no electricity is generated or supplied. Capacity charges constitute two-thirds of the total cost of electricity; while fuel costs comprise of only one-third.

FPCCI maintains that studies reveal that IPPs have been enjoying returns exceeding 73 percent in dollar terms; which is unusually high and predatory when compared to international standards and practices. Pakistan’s energy sector has been trapped in problematic contractual arrangements in perpetuity with IPPs since the 1994 Power Policy. These contracts have led to escalating circular debt close to PKR. 2.8 trillion.

Mr. Khurram Ejaz, former VP FPCCI and President FPCCI’s advisor on FBR affairs, elaborated that guarantees indexed to the US dollar mean any depreciation of the Pakistani rupee increases returns for IPPs – adding debilitating financial burden on the government and the public; which is very high as compared to the global norms and best practices.

Brig Iftikhar Opel, SI (M), Retd.
Secretary General