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Cover Story May June 2011(2)

Cover Story May June 2011(2)

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Published by Zubair Kasuri

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Published by: Zubair Kasuri on Jul 01, 2011
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Cover Story

Zubair Ahmed Kasuri

Free download | flare.pk


Free download | flare.pk

Cover Story

ne of the causes of loadshedding is called the circular debt, which means the private electricity generation companies keep generating the power but they do not get the money for the electricity they have provided, in that case they can generate the electricity for limited period and after that when the outstanding amount to be paid by government to these companies cross a limit, by being not able to fuel costs these companies stop the production till they have get paid back by government. This have been happening very much lately, current approach from government is they let the circular dept build up and while companies stop production they are paid Syed Naveed Qamar Federal Minister For Water & Power back after many months and mean while that halt brings in more shortage and more electricity load shedding subsequently. The slow growth in economy, rising inflation and revenue enhancing measures (particularly taxes) by the government hit the telecom sector growth adversely in the last couple of years. The cellular companies have spent billion of rupees to use alternate energy and other sources to tackle the prolonged loadshedding to maintain smooth and continue services to the subscribers. Inside sources disclosed that these five companies have been spent more than Rs 10 billion per annum on alternate fuel and energy consumption due to massive loadshedding. The cellular companies like Mobilink, Ufone, Warid, Telenor and Zong are spending billions rupees on fuel consumption due to power outages. These companies can save billions of rupees and our economy will take off if loadshedding eliminated. The cellular customers have paid Rs 23.429 billion on GST in the first half of 2010-11. Telecom contributing Rs 100 billion each year to the national exchequer, where ever there is short fall of revenue government looks for industries like Telecom that can be taxed heavily. The electricity loadshedding in


reduce workforce as well as control expenditure if they want to survive during the present loadshedding era. They demand and say loadshedding should to be stop but the incumbent government fails to overcome this menace and day-by-day loadshedding increasing which seems our leaders are not sincere to solve the problem and those funds which were allocated to get rid of power crisis but unfortunately the allocated funds never utilised that’s why we are still facing the non-stop loadshedding. Due to corrupt culture and nonserious approach of the public representatives halted the progress rate and wasted all the public wealth which they got loans or grants from others countries. Mostly cellular companies installed towers in far-flung areas where transportation system also not up to the standard and these companies faced many hardships and difficulties to provide fuel to generators for cellular towers to disperse waves or signals. Over 99 percent of cell sites worldwide are deployed with diesel generators as a backup or as the primary source of electrical power. But the operating expense involved in keeping the diesel fuel flowing can be prohibitive, especially in light of

increasingly remote base station sites and rising theft of diesel fuel and generators. Cellular companies pay 1.5 percent of their annual revenues for USF and ICT R&D fund. Telecom sector is the second highest paying contributor to GST and fourth most sectors for generating withholding tax to the national exchequer. The cellular subscribers are already paying 19.5 percent on telephony services which is

Telecom companies have been spent more than Rs 10 billion per annum on alternate fuel and energy consumption due to massive loadshedding. The cellular companies like Mobilink, Ufone, Warid, Telenor and Zong can save billions of rupees and our economy will take off if loadshedding eliminated

telecom services have paid Rs 23.429 billion on the account of General Sales Tax (GST) in the first half of current fiscal year 2010-11. similarly, a total tax of Rs 36.35 billion (GST+WT) combined revenues of Rs 92.86 billion for all telecom companies in first 6 months of fiscal year 2010-11. The excise duty on the cellular users is the highest in the region. The corporate income tax that is levied on the turnover of the companies is also significantly high. “Heavy taxes on telecom sector are the main hurdle for the growth of the local telecom industry. The government needs to offer incentives to the IT and telecom companies so that they could exploit their full potential and contribute towards Raja Pervaiz Ashraf national growth,” said Former Federal Minister for Water & Power Syed Jamal Aziz, an IT and telecom market expert. Pakistan's cellular telecom industry has lived with a dream that it can sustain its growth that it has witnessed in the last couple of years and so do the government and its institution that they can continue to earn revenue out of the industry. Cellular operators have been supporting new customers and paying activation tax from their own pocket for couple of years. Ufone adopted the policy of simplified tariffs with no hidden charges. Ufone targeted the middle class and students by introducing low rates. Ufone has network coverage in more than 5,885 locations and across all major highways of the country. Recently, Ufone hired a foreign company service to maintain and look after the towers of Ufone company to avoid fuel stealing and others problems faced by the management. Mostly people of far-flung areas like Bannu, Swat, Kohat, and other areas blamed the government and mobile service provider companies for unannounced power loadshedding and suspension of mobile service resulted in the mental illness. Day long loadshedding and continuous suspension of mobile service have been irking the people for so long but concerned authorities have turned their back to such acute matters. Residents of

Pakistan would have not been a big problem to cope with but it’s made much bigger by adopting the defective policies. The loadshedding devastated the overall infrastructure of cellular companies and forced to

highest among all sectors besides tax burden was increased on them in the form of increase in withholding tax to 11.5 percent recently. According to the fresh data released by the Federal Bureau of Statistics, the customers using

the area have demanded for restoration of mobile services and unannounced electric loadshedding in this hot summer season. Even students are facing difficulty while preparing for the annual examinations due to


Cover Story

Free download | flare.pk


frequent power outages. There seems to be no end to power outages and this thing is becoming unnerving for the students. Not a single day passes, when they feel affected as loadshedding turns bright nights into darkness and students wait for the light to return so they can resume their studies. The sun is glowing heat over the innocent earth, which halted the daily life in the maximum areas, the sun is showering heat, while we don’t have light to turn on fans or cool our rooms or offices to do our routine work to rotate the wheel of life. Housewives feel an extra burden on their shoulders. If they wash clothes they worried that washing machines would stop as there is not a scheduled time for power to disappear. Family dinners are interrupted and suddenly people feel at a loss as what to do with their time. As now there is no television to watch and no computer to surf the internet or play games. But recently a number of issues have cropped up between the cellular operators and DHAs/CBs on account of cell tower NOC fees. And these issues have resulted into court cases making the relationship between the service providers and governing bodies very stiff. Cellular companies are complaining that NOC fees by DHA and CBs have sky rocketed over the last couple of years and are not reasonable. When customers have issues with connectivity we curse the telecom companies and it never transpired to us that that issues between the governing bodies and the companies could be the reason behind the companies not being able to lay out more cell sites which would in turn allow better services for the customer. There have still been incidents of forced closure or destruction of sites which has caused an interruption in the cellular services in certain areas in addition to huge financial losses for telecom companies. The telecom industry has revolutionized the way we do things and has allowed everyone from every class in the economy to stay in touch all the time. But it seems evident that the reason behind the industry not going a step further to 3G technology has a lot to do with the growing issues each company has to face to keep their network working. Even though Pakistan is one of the fastest growing telecom industry's in the world we lag in terms of the technology advancement. The manufacturers, vendors and sellers of emergency lights, candles, generators, UPS and batteries benefit the situation and increasing prices day by day, but in this particular case also the present government is in a rabbit nape. The government is doing only one thing with full confidence and commitment and that’s issuing assurance statements that many power projects are in the pipeline to meet the energy shortages. In the long run, there is needed to look for alternative sources of energy to fulfil the uprising demand of energy consumption. According to telecom analysts, in some authorities the annual licence fee has jumped to as much as Rs 1.2 million per cell site. A rough estimate is that the cellular industry is paying close to Rs. 250 million annually to DHAs and Cantonment Boards to keep the cell sites operational. There have still been incidents of forced closure or destruction of sites which has caused an interruption in the cellular services in certain areas in addition to huge financial losses for telecom companies. The government needs to come up with a revised policy towards the IT industry to ensure not only to sustain but also improve progress of this sector, the experts concluded. Pakistan has abundant sunshine throughout the year so solar energy is an option. Although industry analysts say the cost for solar energy is high but

there are advancements which can result in lower costs. Another source is wind power and things can happen on this front if proper attention and focus given in this area. “This is absolutely injustice with this sector which has registered a remarkable growth during the last five years,” telecom experts remarked with showing their grave concerns over the prevailing situation of this sector. They regretted that the government is not facilitating the telecom sector with full force in the wake of the revenue generating potential of this sector. They particularly referred to the pathetic state of affairs in the IT and Telecom Ministry where presently there is no minister and several times even with no secretary.

Now this is the place where the issue of rental power plants come in. The question is, when you are not able to finance the current infrastructure and when you are not fully utilizing the current generation capacity, why on earth you need the rental power plants? It would have made some sense if the rental power plants would have come with low cost electricity but unfortunately other than thinking of paying back the circular dept and taking all the current resources in action our government have chosen to bring in the rental power plants. The plants which do not still started generating the power but we already started paying the rent money.

To watch the present power crisis in the country, Mobilink Ufone and Telenor have signed accords for tower sharing to save power. A technique used to manage the provision of electricity has impacted the performance of mobile service providers in Pakistan

performance of services sector and GDP itself will suffer. To watch the present power crisis in the country, Mobilink Ufone and Telenor have signed accords for tower sharing to save power. The problems of our country have never been the resources but only and only the sincere leadership which really cares for the country and all the souls living in it. For the moment we can just pray to Allah for blessing Pakistan with the leadership which is sincere and capable of making things happen. Next time when you vote in elections just think for your country and nothing else, keep the previous experiences in mind, they will help you much. After that come in the coal reserves which is blessing for this nation, we have got the coal reserves which are in few biggest coal reserves of the world. Research shows that if we use just 2 percent of these reserves for power generation we will be able to keep on generating the extra 25000 Mega Watts of power for next 40 years just from coal and we just have overall electricity consumption of 16000 Mega Watts countrywide today. 12000 Mega Watts of power out of our 16000 mega watts is already being generated. The above facts clearly show that if the right policies are adopted we can not only generate enough power to meet our energy requirements but also generate power to sell out. A technique used to manage the provision of electricity has impacted the performance of mobile service providers in Pakistan. The overall production of small and cottage industries like garments is badly hampered due to prolonged durations of loadshedding. Large and medium size industries and markets are also facing stiff challenges due to frequent power outages. The loadshedding is also affecting educational institutes and hospitals. Prolonged power outages are also responsible for many problems of water supply and sewerage disposal and pumping machines of water supply and sewerage disposal run on electricity. The loadshedding is also badly affecting the mental health of citizens. Healthcare experts say frequent power outages make people

Over the last few months there has been great talk about the introduction of 3G technology but how would that be possible when they are so many unseen costs involved other than just the license fee and network cost. The cellular operators need to wake up and understand that the years of unimpeded growth in customer base may be soon over and the government must also realize that expanding the tax base is a better option than to squeeze more out of the industries that are already heavily taxed. If telecom sector’s growth is stalled either in terms of network expansion, new technology introduction or profitability the overall

anger and irksome. It affects their level of tolerance and makes them touchy and flammable. It is the common experience that people nowadays in Pakistan quarrel over petty issues. Strangely, the government is not intervening to come for the rescue of its citizens and save them from social, economic and mental torture of loadshedding. The provision of electricity is declared as the right of life by many landmark decisions of superior judiciary, but the government, as well as, ruling and opposition political parties and rights groups are tight-lipped over the violation of this basic right of citizens.

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