KARACHI: President Karachi Chamber of Commerce and Industry (KCCI) Iftikhar Ahmed Sheikh has said that the caretaker setup has surpassed the elected governments in terms of raising industrial gas tariff which has been raised by 118 percent since August 2023 from Rs 1100 per MMBtu to Rs 2400 per MMBtu whereas from January 2024 further 40 percent addition of RLNG cost has taken gas tariff to a whopping and historically highest level of Rs 3200 per MMBtu which indicates an overall hike of 191 percent.
In a statement issued, president KCCI informed that since October 2020, the gas tariff, which stood at Rs 819 per MMBtu, has constantly been raised and within a year, it has been increased to Rs 2400 per MMBtu whereas from January 2023, 40 percent RLNG cost has also been added, taking industrial tariff to a totally unbearable Rs 3200 per MMBtu.
He said that it was a matter of grave concerns that the Petroleum Division, which was in sheer disagreement with industries of Karachi at stakeholders ™ meeting held with prime minister last month, has issued a notification to SSGCL to charge further up to 40 percent for RLNG to industrial gas supply.
œIt appears to be a clear-cut indication that someone intends to close/ shutdown all the industries in Karachi. The recurring exorbitant increases in the energy tariffs (gas and power) under IMF dictates and other costly industrial inputs due to mammoth rupee-dollar parity and deprival of level playing field to compete globally have brought the industries at the verge of closure, he warned, adding that the export-oriented industries in particular and import-substitute industries in general were confronting greatest challenges which have never been witnessed in the history of Pakistan where the industrial and export productions have come to a standstill due to unbearable cost of manufacturing.
Iftikhar Sheikh further said that many industries have already shut down their production in Karachi and a huge number of industries across Karachi were also fearing closure of businesses as not only gas but also the electricity price for export sector has been increased by 115 percent from Rs 20 per KWh to Rs 43.07 KWh and for general industries, electricity has been raised by 42 percent from Rs 30.39 per KWh to Rs 43.07 KWh.
œMoreover, the hike in gas tariffs has also impacted the security deposits being submitted by industries to SSGC which have become totally unaffordable.
He particularly mentioned that domestic and fertilizer sectors were being provided cross-subsidy completely borne by the industrial and commercial consumers which was highly unfair particularly in case of fertilizer sector as it makes profits of up to billions of rupees, enjoys subsidy on gas and most shockingly, the locally produced fertilizer was being smuggled outside the country which was tantamount to smuggling gas.
Sharing some of the key reasons behind high cost of doing business, president KCCI mentioned that minimum wages in Sindh have been raised to Rs 32,000 from Rs 25,000 per month, US dollar against Pak rupee has escalated by 20 percent from Rs 234.13 in January 2023 to Rs 281.05 on January 11, 2024, State Bank Policy rate stands at the highest level of 22 percent, Export Refinancing & LTFF stood 19 percent plus banking spread.
All these and several other harsh factors brutally affecting trade and industry led to bringing down the national exports by 12.71 percent from $ 31.78 billion during July-June 2021-22 to $ 27.74 billion in July-June 2022-23 which also shows a downfall of 16.61 percent when compared with the target of $ 32.35 billion for the fiscal year 2022-2023.
He was of the opinion that government unwise policies and moves were having a devastating impact on the already ailing economy as the industries have started shutting down which would eventually reduce the exports as well as foreign exchange. The closure of industrial activities will also lead to massive lay offs which may cause unrest by triggering law and order situation.
Copyright Business Recorder, 2024
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