Key Takeaways:
- Power Minister disapproves of FBR’s role in making the power sector a tax collector.
- Electricity consumers pay approximately Rs860 billion in taxes annually.
- Plans to transfer power sector control to the private sector are underway.
- Four power plants to be converted to domestic coal, saving $1 billion.
Introduction:
Power Minister Sardar Awais Ahmad Khan Leghari expressed strong disapproval over the Federal Board of Revenue (FBR) for burdening the power sector with tax collection responsibilities. This concern was raised during a meeting of the National Assembly Standing Committee on Energy, where discussions also covered issues of excessive electricity billing and prolonged power outages.
Tax Burden on Electricity Consumers:
During the meeting, it was revealed that electricity consumers pay around Rs860 billion in taxes every year. Power Division officials briefed the committee that a 10-12% tax is imposed on electricity bills ranging between Rs500 and Rs20,000, while bills of Rs25,000 face a 7.5% advance tax along with a 4% sales tax.
Move Towards Privatization:
The Power Division is working towards privatizing the power sector, as highlighted by the officials. Currently, there are about 100 independent power producers (IPPs) and 11 distribution companies in the country. The Private Power and Infrastructure Board (PPIB) oversees contracts with these IPPs.
Electricity Production Capacity:
Officials informed the committee about the country’s overall electricity production capacity, which stands at 45,018 MW. This includes 9,331 MW from hydropower, 4,507 MW from thermal sources, and 3,545 MW from nuclear sources. The government sources contribute 17,383 MW, while the private sector provides 27,635 MW. In May and June, electricity production was close to 28,000 MW.
Energy Mix and Future Plans:
The current energy mix includes 28% from hydropower, 28.3% from gas, 18.6% from nuclear, 16% from coal, 5% from solar, and 4% from oil. The government has decided not to establish any new power plants that run on imported fuel, focusing instead on hydropower and Thar coal projects.
Conversion to Domestic Coal:
Power Minister Leghari announced the conversion of four power plants to domestic coal, which is expected to save the country around $1 billion. This move aligns with the government’s strategy to reduce dependency on imported fuel and leverage local resources for energy production.
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