ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has dismissed the telecommunication companies’ petition, seeking revision of tariff from commercial to industrial tariff.
According to a decision of NEPRA, the Authority is of the considered view that the telecommunication companies do not fulfill the criteria as laid down in the consumer end tariff determinations for application of ‘industrial supply’ tariff. Hence, the petitions are dismissed, said NEPRA.
Pakistan Telecommunication Company Ltd. (PTCL), Telenor Pakistan (Private) Ltd, Pak Telecom Mobile Ltd (PTML), Pakistan Mobile Communication Ltd (PMCL), and Deodar Private Ltd., filed separate petitions, requesting the authority to approve revision in tariff of telecom operators from Commercial to Industrial category, in light of the status afforded by the government vide notification No.l (11)/2004-lnvIIl, dated 20.04.2004 whereby the telecom sector, including cellular operators has been classified as an Industry.
NEPRA’s hearing in the matter of petition filed by PTCL was held on April 05,2022 while hearing regarding petitions of PTML, PMCL and Deodar Pvt. Ltd., was scheduled on July 05, 2022 and it was attended by the petitioners, intervener M/s CM Pak (Zong), Ministry of Energy, K-Electric, central power purchasing agency (CPPA) and other relevant stakeholders.
The Authority is of the considered view that the term ‘value addition’ used in the definition of industry for the purpose of applying industrial supply tariff is used in the context of value addition through manufacturing or production process. In case a more broader meaning of the term ‘value addition’ is assumed, a large number of commercial activities will fall within the definition of ‘industry’ for the purpose of electricity tariff which cannot be the intent of the definition given in the consumer end tariff determinations.
It is pertinent to note that the categories of consumers presently being used in the consumer end tariff determinations are mostly the legacy which the power sector was using under the WAPDA as a vertically integrated utility. After the amendment in NEPRA Act in 2018, the powers to prescribe consumer categories has been specifically vested in the federal government. Similarly, in the consumer end tariff determinations, the ‘Industrial Supply’ is defined as “Industrial Supply means the supply for bona fide industrial purposes in factories including the supply required for the offices and for normal working of the industry.” Further, the “industry” is defined as “a bona fide undertaking or establishment engaged in manufacturing, value addition and/or processing of goods.”
The words ‘Industrial Supply means the supply for bona fide industrial purposes in factories’, as used in the definition of industrial supply, indicate the intent to apply the Industrial Supply tariff on the industries involved in some manufacturing or production activities.
As per Pakistan Factories Act, 1934 a “factory” means any premises, including the precincts thereof, whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is ordinarily carried on with or without the aid of power, but does not include a mine, subject to the operation of the Mines Act, 1923 (IV of 1923):
As such the outfits of the telecommunication sector cannot be termed as factories; hence in the considered opinion of the Authority the same may not qualify the criteria for application of tariff under the ‘Industrial Supply’ category, said NEPRA in its judgement.
Telecom operators in Pakistan are providing mobile and broadband services to 188 million subscribers with an annual turnover of over Rs. 400 billion, creating 25,000 direct and indirect jobs. The telecom sector has brought foreign direct investment of over $10 billion to date and continues to do so in the shape of license renewal, spectrum fees, etc.
Meanwhile, Federal Minister for Information Technology & Telecommunication Syed Amin Ul Haque has expressed his concern over NEPRA’s decision regarding the dismissal of the petition of telecom companies to grant industrial electricity tariff.
In a statement, he said that the telecom sector has been given the status of an industry by the government and we believe that it is the right of telecom companies to get electricity tariff at industrial rates.
He added that the matter is not only restricted to the telecom sector but it can be an important step towards providing better facilities to the consumers and attracting foreign investors.
