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1- CHALLENGES TO THE BANKS IN THE NEW SCENARIO
2-
IT: WHY SINDH LAGS BEHIND?
3- HIGH TARIFFS ON ESSENTIAL UTILITIES
4- MUTUAL FUNDS

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HIGH TARIFFS ON ESSENTIAL UTILITIES

 

 

By Syed M. Aslam
Sep 29 - Oct 05, 2003
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The inclination on the part of the financial managers to use essential utilities power, petroleum and telephone as a primary source of revenue generation is taking a heavy toll on the overall economic growth of the country. Official figures show that power consumption grew at a rate of 6.5 per cent during the first half of the 1990s but drastically slowed down to an average of 3 per cent during the second half due primary to substantial increase in power tariffs.

POWER

Adequate and reliable supply of power is viewed as one of the main pre-requisite for the growth of economy anywhere. Electricity is an in-built cost of all commercial, trade, business, industrial and manufacturing activities and any increase in its prices is bound push production costs all over.

The incessantly increase in power tariffs over the years have taken a heavy toll on the agriculture sector in a country which pride itself as an agrarian economy. Official figures show that electricity consumption declined drastically in the agriculture during the last decade because farmers were forced to disconnect the tubewells due to high electricity tariffs. Similarly, the share of industrial sector in the electricity consumption during the last decade decreased from 17.8 per cent in 1990-91 to just 13 per cent in 1998-99 while share of the commercial sector also decreased by 1.1 per cent to 5.5 per cent during the same period.

On the other hand, the share of the household sector in the total electrcity consumption during 1990-91 to 1989-99 increased from 33 per cent to 44.8 per cent due primary driven mainly by population increase. The fact that the biggest portion of the electricity is being used by the household sector is all the more worrying because it reflects the growing use of power for non-productive use.

 

 

The industries, particularly those export-oriented, have been much vocal about the incessant increase in electricity tariffs claiming that it has pushed the production costs to unaffordable levels. They also say that rising power tariff is rendering Pakistani products incompetitive in the international markets to undermine exports.

However, the worst victim of the rising power tariffs is the residential consumer who just has no means to pass it off like industrial, commercial or agricultural user. Not only the power tariffs are on a constant rise but the consumers, particularly the residential, are being victimised for the inefficieny and mismanagement of the Karachi Electric Supply Corporation. Over and excess billing has become a norm at the KESC and a visit to one of its many billing offices across the city is enough to prove it.

Last month, the KESC sent tens of thousands of erroneous bills to the consumers. People were seen running from pillar to post to have their bills corrected and yet the corporation did not seen it fit to inform the customers that it had send the shocking bills to rectify the situation. Just how excessive is the billing is evident from the fact that people in poorer localities of the city have been receiving bills that if paid don't leave any monies left to survive. Highly charged arguments at the KESC billing offices are all too common and the only solace offered to the people is that since the bill quoted such-and-such an amount it got to be paid. Can the consumers be treated in a more shabbily manner?

PETROLEUM

The successive governments have find it fit to turn petroleum and products an easy revenue collecting toll resulting in pushing the prices over the years. The twice monthly practice of reviewing the prices of petroleum on the first and the 16th rests in the hands of the Oil Companies Advisory Committee which has no representation from the users. There have been more increases than reductions, in many cases despite reduction in international prices of oil. The users just don't have any say in the price fixation process.

Successive governments, including the present one, has find it convenient to use petroleum and products as the most affective arm of revenue collection. They have resorted to it from time to time to make up for shortfall in revenue collection and the indirect taxation has been the major reason for pushing the prices of petroleum and products. The tendency to turn oil marketing companies into revenue collectors has pushed the costs of all products and goods.

TELEPHONE

Similarly, the cost of using fixed line telephone has been on incessant rise. The monthly line rent has been increased almost six-fold over the years and even the local calls, which are free in the major part of the world, are now metered. Year after year the state-owned Pakistan Telecommunication Company Limited (PTCL) is showing record profitability which is driven primarily by increased tariff and not expansion in the user base. PTCL earned a revenue of Rs 66.43 billion in 2001-2002 depicting a 7 per cent increase over the previous year. The bulk of the PTCL's revenue came from domestic use, around 71 per cent compared to just 60 per cent a year earlier in 2000-01. The profitability of PTCL is coming at the cost of its customers who are being milked more and more by each passing year.