KARACHI, June 14: The generator market is facing shortage of generating units as importers have stopped clearance of units from the port at a time when demand has surged to record high due to long duration of load-shedding as consumers find it only way to beat the scorching heat.
Customs officials are demanding higher valuation rates of imported generators. Besides, importers and customs officials are also locked in a tussle over a budgetary decision which allows duty-free import of generators for home consumption.
An importer said that the Customs officials were willing to release only 1-5 kVA diesel generators without five per cent customs duty but were not ready to release petrol generators having 10 per cent customs duty and one per cent income tax.
He said that the Customs authorities knew that over 80 per cent of petrol generators of one to five kVA were being used in homes and people avoid using diesel machines because irritating noisy sound. Soundless diesel generators are mainly available in higher kVA.
Chairman Karachi Generators Importers Group (KGIG) Sikandar Shahzada said that some 150-200 containers carrying 3,000-4,000 units (from one to 1,000 kVA) were awaiting clearance. The cumulative duty on diesel generator import before the budget announcement was 26 per cent (five per cent customs duty, 15 per cent sales tax, six per cent income tax) which had now reduced to 21 per cent.
But the authorities are not ready to release petrol generators without 10pc customs duty, he added.
“When the government has clearly announced duty-free clearance of home consumption generation then why importers are being forced by customs officials to pay duty on petrol generators,” he asked, adding that the government should intervene and resolve the issue.
The government has also imposed one per cent additional surcharge on imports but the traders have yet to increase the prices of generators. Importers want quick release of generating units amid surging demand. “In case weather changes or the power supply situation improves then these generators will become redundant,” he remarked.
After suspension of clearance of imported generators at the Customs stage, the market is being dumped with smuggled generators and their market share has surged to over 30 per cent as compared to two to three per cent 20 days back.
Mr Sikandar said that the sales of generators had gone up by over 300 per cent in May as compared to last year since the KESC had resorted for long hour power outages. Generator market is now wearing a festive look as rush is increasing following massive surge in demand.
However, he said that there was no problem of supply from abroad as 3,000 units awaiting clearance at the port, but importers were more concerned over the problems at the Customs stage which should be resolved at the earliest.
Giving an example, he said Customs used to clear a Chinese generator at a value of $40 per kVA but for the last 15-20 days they were demanding additional amount of $60. In case of Japanese generators, they demanded $200 as against $75.
The idea of growing demand of generators in Pakistan can be gauged from the fact that importers are facing difficulty in finding vessels from China and currently getting their deliveries in one and a half month as compared to 20-25 days earlier.
The data of Federal Bureau of Statistics (FBS) shows an increase of 43 per cent in generator imports to $595 million in July-April 2006-07 as compared to $416 million in the same period of 2005-06. Karachi consumes about 40 per cent of total generator imports, while 60 per cent accounts for the rest of the country mainly Punjab.
Consumers have now lost every hope from the power suppliers Wapda and KESC as these companies have painted a bleak power scenario for the next five years. Even the government is least bothered about the plight of consumers. People are trying to handle the power crisis on their own instead of relying on these utility companies.
Sikandar said if Chinese low-priced generators would have not landed in the market then the generators’ import would have not thrived meteorically.
However, the market share of Chinese generators has dropped to 60 per cent this year from 85-90 per cent last year, while the market share of Japanese generators, which used to be 10 per cent last year, has surged to 20 per cent due to increase in imports as yen has lost its strength against the dollar, he added.
