Pakistan’s textile industry has identified serious distortions in the electricity tariff resulting in the build-up of billions of rupees per month of unpaid refunds, making the industry unsustainable.

In a letter to the National Electric Power Regulatory Authority (NEPRA), the All-Pakistan Textile Mills Association (APTMA) has pointed out that the existing scheme of power tariff was not only creating problems for consumers, particularly the industry, but also the distribution companies.

The association said the regulator had adopted furnace oil price at Rs65,769 per tonne for reference tariff for fiscal year 2014-15 instead of actual price of Rs56,000 per tonne prevailing at the time when the determination was issued.

Given the fact that NEPRA was obligated to order monthly adjustments on the basis of fuel costs, Rs3-4 per unit per month adjustment has been allowed since July 2015. Sadly, the fuel price adjustment was being passed on to consumers with a lag of two to three months, it said.

This meant that distribution companies were firstly receiving billions of rupees over and above their actual cost of service in the shape of extra amount billed and collected from customers each month and returned to relevant customers subsequently.