Pakistan Telecommunication Company Limited (PTCL) and mobile phone operators have sought NEPRA to have their power prices altered from commercial to industrial to take advantage of the incentives provided to industrial operators.
It may be noted that the telecom sector was recently designated as an industry, making it eligible for preferential power pricing.
The telecom business, on the other hand, was charged according to previous commercial tariffs, prompting the whole industry to petition NEPRA for a reduction in power costs.
Not to mention, electricity is one of the major opex contributors, to the point where PTCL — in its petition to NEPRA — stated that the company is facing significant financial consequences as a result of rising electricity bills, and that the company is forced to close approximately 10 exchanges every month as a result of heavy losses.
PTCL and all four mobile operators are entitled to all concessions available to “Industry,” including industrial electricity tariffs for their exchanges and other installations, according to a Tariff Petition filed under Section 46 of the Regulation of Generation, Transmission, and Distribution of Electric Power Act, 1997 (Xl Of 1997), The National Electric Power Regulatory Authority (Tariff Standards and Procedure) Rules, 1998, and Other Enabling Regulations.
The petitions to NEPRA also stated that the existing Telecom operator connections tariffs were the industrial tariffs, B-1 and B-2 until November 2001, when the Ministry of Water and Power, Government of Pakistan, revised the tariff A-2 (a) up to 20 kW and A-2 (b) above 20 kW separately on August 8, 2001. The tariff schedule was amended, and NEPRA authorised a new rate A-2 (c) effective 3-9-2007, which was applicable to all business connections with a load exceeding 20 kW. (two-part tariff).
The tariff schedule was further updated on September 26, 2008, and NEPRA authorised a new rate A-2 (C) that applied to all business connections with a load above 05 kW.
Above 5 kW, instead of above 20 kW, a two-part charge was imposed. Fixed costs and low power factory penalties were levied in the monthly electricity bills of all commercial connections with loads of 5 kW and higher under the two-part tariff.
The Ministry of Industries and Production of the Government of Pakistan proclaimed the telecommunications sector to be a “industry” on April 20, 2004.
As a result, PTCL was entitled to all reductions offered to “Industry,” including industrial power tariffs for its exchanges and other facilities. A new clause “c” is included in section 2(29C) of the Income Tax Ordinance, 2001, via Finance 2021, declaring the Telecom Sector as an industrial.
It is said that Pakistan Telecommunication Company Limited (PTCL) operates in 19 areas across Pakistan and is the largest user of power from all DISCOs. The organisation has 7823 connections and utilises 17 million units, totaling Rs. 339.84 million in bill payments.
The impact of fixed charges and low power factor penalties on PTCL’s grievances has increased significantly as a result of the reduction of the load limit of the A-2 (b) tariff. Bills of exchanges and other connections have increased by 40% as a result of the reduction of the load limit of the A-2 (b) tariff. In Pakistan’s rural regions, 75% of telephone exchanges are equipped with tiny switching systems in response to villagers’ requests.
These connections have a sanctioned/connected load of 5 kW to 40 kW, and the running load of these exchanges is a maximum of 10 kW. In many circumstances, especially during the winter season, the sanctioned loads of these connections do not even match the real load of this little load. The reading personnel of DISCO’ S occasionally recorded MDI readings that were 3-4 times greater than the sanctioned load.
Because there is no motor load, no passive power is recorded; hence, the power factor range is already up to 1.0 percent. Each location has already been equipped with PFI equipment.
Due to rising power prices as a result of fixed charges and LPF, many exchanges are now experiencing significant financial consequences in comparison to income generated. PTCL is obliged to close around 10 exchanges per month due to a significant loss of income.