NEPRA Dismisses Telcos Petition for Revision of Tariff from Commercial to Industrial

The National Electric Power Regulatory Authority (NEPRA) has dismissed the telecom industry’s petition for revision of tariff from commercial to industrial.

NEPRA in its verdict said that “value additions” used in the definition of the 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 broader meaning of the term “value addition” is assumed, a larger number of commercial activities will become eligible for the purpose, therefore, the Authority has turned down the request of the cellular mobile operators (CMOs).

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.

In 2004, the telecom sector was declared an “industry” by the Ministry of Industries and Production. Therefore, all CMOs are entitled to benefit from the concessions available to “industry” including industrial tariff of electricity for its towers and exchanges but it was never granted in letter and spirit.

In 2014, the Ministry of Information Technology and Telecommunication also endorsed the request of the telecom sector including cellular mobile operators to be classified as “industrial undertakings” under clause (b) of Section 2 (29C) of the Income Tax Ordinance, 2001.

In 2021, in line with the decision of the federal cabinet, all telecommunication companies operating under the license from the Pakistan Telecommunication Authority (PTA) were specifically included in the definition of “industrial undertakings” by addition of clause (c) to section 2 (29C) of the Income Tax Ordinance, 2001 through the Finance Act, 2021.

The CMOs had filed multiple petitions with NEPRA that was in the process of determining uniform tariff of DISCOs throughout Pakistan. However, they were not entertained.

The CMOs again filed a separate tariff petition with the Authority on the merit that the telecom sector falls under the Authority’s definition of creating value additions to the industry but the petition has also been dismissed.

IT Minister Expresses Concern

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.

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