Karachi: Business operations in Pakistan face an unprecedented challenge due to the high costs of electricity, exacerbated by hefty payments to independent power producers (IPPs) that drain the national treasury, Mian Zahid Hussain, Chairman of the FPCCI Advisory Board. His comments highlight the urgent need for reforms in the power and energy sectors to prevent widespread business closures and economic decline.

According to Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain stressed on Friday the dire state of business viability under current electricity rates. He noted that the IPPs are compensated with 2000 billion rupees annually as capacity payments, even for factories that are not operational and do not generate electricity. This system significantly hampers economic progress, putting severe financial strains on active industries.

Hussain suggested a potential improvement in the economic landscape if non-operational IPPs resumed activity and industries were charged reasonable electricity rates. He proposed a tariff of 25 rupees per unit for industries, which could boost exports to six billion dollars. Conversely, the current rate of 60 rupees per unit threatens to shutter a record number of businesses this year, with detrimental effects on government revenue and employment levels.

The necessity for substantial reforms in the energy sector was underscored by Hussain's call for a revision of contracts with IPPs, a forensic audit of all private power projects, and immediate action against electricity theft, line losses, and bill defaults. He also indicated the extensive influence of mafias over critical areas such as electricity, budget, and taxes, which oppose reforms.

Moreover, Hussain criticized the performance of the Federal Board of Revenue (FBR), which fell short of its revenue target by collecting 9.3 trillion rupees against a goal of 9.4 trillion. He argued for significant enhancements in the FBR system through the appointment of qualified personnel, the implementation of a digital recording system for the economy, and increased transparency. He lamented the absence of decisive actions toward these improvements.

In conclusion, Hussain pointed out that serious efforts to tax agricultural income are thwarted by the unity of feudal elites whenever their interests are threatened. He warned that without effective taxation of influential sectors, the tax targets would remain unmet, maintaining a low tax-to-GDP ratio and exacerbating economic and poverty issues in Pakistan.