The telecom sector’s request for a change in tariff from commercial to industrial was denied by the National Electric Power Regulatory Authority (Nepra).
In its ruling, Nepra stated that the term “value additions” used to describe an industry for the purposes of applying industrial supply tariffs refers to value additions made during the manufacturing or production process.
The Authority has rejected the request from the cellular mobile operators because if “value addition” is given a broader definition, the more commercial activity would qualify for the purpose (CMOs).
With an annual revenue of nearly Rs400 billion and 25,000 direct and indirect employment created, Pakistani telecom providers serve 188 million mobile and internet consumers.
To far, the telecom industry has attracted nearly $10 billion in foreign direct investment and has continued to do so through licence renewal, spectrum fees, etc.
The Ministry of Industries and Production designated the telecom business as an “industry” in 2004.
Therefore, all CMOs have the right to take use of the concessions offered to “industry,” such as the industrial tariff of electricity for its exchanges and towers, but this right has never been fully realized.
In 2014, the Ministry of Information Technology and Telecommunication also approved the telecom industry’s request to be categorized as “industrial enterprises” under clause (b) of Section 2 (29C) of the Income Tax Ordinance 2001. This request included cellular mobile operators.
By adding clause (c) to section 2 (29C) of the Income Tax Ordinance, 2001 in 2021, all telecommunication companies operating under licences from the Pakistan Telecommunication Authority (PTA) were specifically included in the definition of “industrial undertakings,” in accordance with the federal cabinet’s decision. This was done through the Finance Act of 2021.
The CMOs had submitted numerous petitions to Nepra, which was deciding on a uniform rate for discos across Pakistan. They were not amused, though.
