Incremental Benefit Must Be Passed on to Karachi Industrial Units: FBATI

KARACHI:The government and concerned authorities should release the allocated funds for incremental benefit subsidies on electricity to Karachi’s industrial units, particularly Small and Medium Enterprises (SMEs). This action is crucial to prevent the closure of significant economic activities and layoffs in the commercial and industrial hub of the country, according to Syed Raza Hussain, President of the Federal B Area Association of Industries.Incremental benefit must be passed on to Karachi industrial units: FBATI

Hussain highlighted that while the government has provided power subsidies to industries in various cities, Karachi has only received Rs. 9 billion out of the allocated Rs. 42 billion intended as relief for industries affected by the COVID-19 economic downturn during FY20-23. The financial relief was halted due to disagreements between the industries and K-Electric.

The power utility company has requested that the federal government release the subsidy funds directly to their account. Conversely, the government has directed K-Electric to release the funds first and recover the amount as reimbursement.

This situation has created an uncompetitive pricing environment, with electricity costs in Karachi being Rs. 20 higher per unit than in other cities. To maintain their market presence, Karachi industries have continued supplying their buyers at a loss, hoping to offset these losses through the incremental benefit subsidy.

Currently, NEPRA has directed K-Electric to release the remaining allocated funds to Karachi industries following a tribunal decision in their favor.

Hussain noted that industrial production and economic activities in Karachi are declining due to soaring electricity costs, which have also led to layoffs in various industrial zones. Immediate transfer of the subsidies could help revive industrial production and economic activities.

He has urged Federal Minister for Energy Owais Leghari and Minister of State Muhammad Ali to address this issue urgently, calling for the removal of specific surcharges imposed solely on Karachi consumers, which he deems unjustified.

Additionally, Hussain proposed increasing the gas supply to K-Electric to lower electricity costs, as the current generation from RLNG is prohibitively expensive. He warned that delays in subsidy distribution and high electricity costs might lead to protests, including sit-ins and demonstrations, if the situation is not resolved soon.