Business Leaders Demand Rejection of 2,600 percent Security Deposit Hike by DISCOs

Business leaders have voiced strong opposition to the proposed 2,600% hike in security deposit charges by electricity distribution companies (DISCOs), arguing that it will have a devastating impact on industries, particularly those in the export sector. They have called on the National Electric Power Regulatory Authority (NEPRA) to reject this increase and conduct a thorough audit of the existing security deposits already collected from consumers.

Both the Karachi Chamber of Commerce and Industry (KCCI) and the Pakistan Tanners Association (PTA) have expressed concerns, stressing that the hike will stifle industrial growth by diverting critical working capital towards financing inefficient power companies. The proposed increase would raise security deposits for B2 category consumers from Rs2,010 per kilowatt to Rs54,783 per kilowatt, a move that has been widely criticized as excessive and unjustified.

KCCI President Muhammad Jawed Bilwani pointed out that businesses are already grappling with rising electricity costs and economic pressures. He has urged NEPRA to reject the proposed hike and engage in a transparent consultation process before imposing such a heavy financial burden on industries. Bilwani also noted that DISCOs, including K-Electric, have collected security deposits far beyond the actual demand, urging NEPRA to carry out a comprehensive audit.

He highlighted that K-Electric has collected deposits based on a sanctioned load of 13,000 megawatts, while the city’s peak demand is just 3,500MW, with an average of 2,200 to 2,400MW. He also pointed out that similar over-collection practices are taking place nationwide, with DISCOs having sanctioned a total of 97,800MW, despite the national peak demand standing at only 23,000MW.

Pakistan Tanners Association Chairman Hamid Arshad Zahur also criticized the proposed hike, calling it unaffordable for export-driven industries. Zahur warned that the combination of higher taxation, increased energy costs, and the proposed deposit increase would further erode Pakistan’s competitiveness against countries like India, Bangladesh, and Vietnam. He emphasized that the new structure would lead to severe cash flow problems, preventing businesses from investing in new machinery and expanding exports.

Zahur also argued that DISCOs are unfairly shifting their financial risks onto consumers rather than improving their own financial management, which could drive more industries to seek alternative energy solutions like solar power, further reducing the consumer base of DISCOs.

Business leaders also challenged the need for such a proposal, questioning why security deposits were being raised despite existing legal safeguards such as property ownership verification and established billing recovery mechanisms. They warned that the proposed increase would undermine industrial growth and run counter to government efforts to stimulate economic recovery.

Business representatives have appealed to Federal Minister of Energy Awais A. Khan Leghari, Special Assistant to the PM Muhammad Ali, and NEPRA Chairman Waseem Mukhtar for an immediate review of the proposed hike to avoid significant damage to Pakistan's industrial and export sectors.


SOURCE: The Profit Magazine Pakistan