Protests against exorbitant electricity prices continued to grip Pakistan as consumers from all corners of the country voiced their frustration by burning electricity bills and chanting slogans denouncing overcharging. With Pakistan facing a severe economic crisis and inflation rates surging to a staggering 29 per cent, citizens are grappling with the overwhelming impact of inflated electricity costs.
The outcry has intensified as incumbent authorities adhering to an IMF deal have slashed power sector subsidies, resulting in unprecedented price hikes that have burdened already inflation-weary citizens. The new pricing structure has set electricity rates at a record high, significantly affecting the cost of living for the nation’s over 240 million inhabitants.
Central to the grievances is the manner in which electricity bills are calculated. The basic charge is linked to kilowatt-hours (kWh) or units consumed, a component that carries an array of additional taxes. These taxes, directly borne by the masses, have contributed to the mounting frustration felt by the population.
An individual from Gujranwala recently shared an eye-opening example of the impact of these charges. Despite consuming around 212 units in the previous month, he received an electricity bill of Rs10,500, while the cost of the electricity consumed was merely around Rs6,400. The disparity between consumption and billing has drawn attention to the various components contributing to the final cost.
For those consuming slightly over 200 units, the Fuel Price Adjustment (FPA) accounts for approximately Rs250. This adjustment is contingent on the price of the fuel used in electricity generation. If the cost of fuel rises during power generation, WAPDA (Water and Power Development Authority) levies an additional charge in subsequent billing cycles.
Breaking down the bill further, it reveals a complex web of charges. An electricity duty of around Rs100 is imposed, accompanied by a General Sales Tax (GST) of Rs1,316.
Additional charges include Income Tax amounting to Rs900 and Extra Taxes totaling Rs366. The bill also features a peculiar charge of Rs227 labeled as ‘Further Taxes,’ which has prompted criticism from citizens questioning its purpose and transparency.
Additional charges on the bill encompass Rs365 for Sales Tax, Rs680 for Financing Cost Surcharge (FC Surcharge), and Rs115 designated as ‘Taxes on FPA.’ Notably, non-filers of income tax are subjected to supplementary charges on their utility bills.
As confusion mounts among consumers regarding the breakdown of charges, it is imperative for electricity consumers to comprehend the various taxes levied on their monthly bills. Diverse categories of consumers are subject to a range of taxes, duties, and surcharges, contributing to the complex structure of electricity pricing in Pakistan.
Below is a list of the taxes and levies imposed on electricity consumers in Pakistan:
Electricity Duty: Ranging from 1.0 per cent to 1.5 per cent of Variable Charges, this provincial duty is levied on all consumers.
General Sales Tax (GST): At a rate of 17 per cent of the electricity bill, GST is levied on all consumers under the Sales Tax Act 1990.
PTV License Fee: Domestic consumers pay Rs35, while commercial consumers pay Rs60 as PTV license fee in their electricity bills.
Financing Cost Surcharge: This surcharge of Rs0.43 per kWh applies to all consumer categories except lifeline domestic consumers.
Fuel Price Adjustment (FPA): FPA represents the difference between actual fuel charges and reference fuel charges. Positive variation leads to a charge, while negative variation benefits the consumer.
Extra Tax: Imposed on industrial and commercial consumers not registered in the active taxpayer list, rates range from 5 per cent to 17 per cent based on different bill amount slabs.
Further Tax: Levied at a 3 per cent rate on all consumers without a Sales Tax Return Number (STRN), except for domestic, agriculture, bulk consumers, and street light connections.
Income Tax: Charged at varying rates depending on the applicable tariff and the electricity bill amount.
Sales Tax: Commercial consumers face a 5 per cent sales tax on bills up to Rs20,000 and a 7.5 per cent tax on bills exceeding Rs20,000.
With public discontent on the rise, authorities are urged to address the concerns of citizens and seek a balanced approach that mitigates the impact of these charges on the already struggling populace.
As the nation grapples with economic uncertainties, finding a solution that eases the burden on citizens while ensuring the sustainability of the power sector remains a pressing challenge.
