Chairman of the National Electric Power Regulatory Authority (NEPRA) Tauseef H. Farooqi told leaders of the Lahore Chamber of Commerce and Industry on Saturday that he will not reconsider the implementation of the Maximum Demand Indicator (MDI) fixed power fee on the business community.
The MDI is a predetermined fee that industrialists must pay even if they are not consuming electricity. According to Farooqui, it is necessary to compensate the costs of producing and distributing electricity to industry.
During a Saturday meeting with Farooqui in Lahore, Kashif Anwar, president of the Lahore Chamber of Commerce and Industry (LCCI), urged the NEPRA chairman to play his part in reversing the MDI tax. He called the chairman’s attention to the matter by stating that a few months ago, NEPRA imposed MDI charges on all industrial and commercial consumers, charging them 50% of their sanctioned load.
“The electricity bill must be paid even if the units are not in use. If they exceed 50% of their authorised load, they will pay based on the number of units utilised instead of MDI charges,” Anwar explained. According to him, the decision affects the business community whose industrial units are shuttered or whose operations are seasonal. He stated that this issue was also discussed with the CEO of Lahore Electric Supply Company, who assured the business community of his full support.
Nonetheless, the chairman clarified that electricity sector dues, which include import prices, are to be covered by charging based on allocations. He stated that production costs are already high due to the country’s dependence on imported energy, and the devaluation of the currency has exacerbated the situation.
“Seasonal businesses can disconnect their electricity connections and reconnect when they require electricity, but cold storages are not seasonal businesses; they operate year-round and meet the country’s needs for vegetables, fruits, and perishable items,” Farooqui explained.
Chairman of NEPRA stated that at the rate Discos were charging MDI fees, they were paying Central Power Purchasing Agency Guarantee 10% more (CPPA-G). “They are charging an extremely low price,” he remarked.
Next week, there will be a hearing regarding MDI. By joining, the business community can share their concerns with us. If businessmen use more than fifty percent of electricity, they are not charged MDI. If the sanctioned load is high but the utilisation is modest, a rethink is required,” Farooqui emphasised.
He stated that it has been agreed that the net metering tariff will remain at Rs 19,90 and will not decrease.
He stated that NEPRA had awarded permits for a total of 65,000 megawatts (MW) of electricity supply, while the country’s overall demand was 23,000 MW.
“Our installed capacity is currently 43,000 MW.” Imported fuels are used to produce 65% of the nation’s electricity. We have no bucks. Due to the devaluation of the rupee, coal has also become more expensive. Owing to depreciation, our costs have multiplied by eight, and our overall input costs have risen by 16%. How is it feasible that we have not increased the tariff despite the 16% increase in input costs?” Farooqui stated.
Anwar added that reports were circulating that a proposal to cut the net metering rate was being considered.
“On the one hand, we are concerned about lowering our import expenses. Our fuel import bill is $23 billion. In this case, we must switch to renewable energy, but net metering rates are decreasing. If such a decision is made, the government will be very reluctant to promote the usage of renewable energy, especially solar energy,” he stated.
In addition, he wanted the NEPRA chairman to clarify the net metering rate.