Survival of industry at stake due to ‘bad’ energy, tax policies: Mian Zahid

KARACHI: The Chairman of National Business Group Pakistan, the President of the Pakistan Businessmen and Intellectuals Forum, the President of All Karachi Industrial Alliance, the Chairman of the FPCCI Advisory Board, Mian Zahid Hussain has warned that the government’s current energy policies and taxation measures have made survival difficult for the country’s industries.

The textile industry, a major contributor to Pakistan's economy, is struggling to compete in the global market due to high energy costs. Instead of driving growth, these policies are proving poisonous to the economy, pushing many industries, including textiles, to the brink of collapse.

Mian Zahid Hussain highlighted the significant impact of the petroleum and climate support levies imposed on furnace oil. These measures have now raised the total tax share to around 60% of its price, a staggering burden that is weighing heavily on businesses.

He recalled that during past energy crises and extreme load-shedding, industries turned to captive generation, a term used to describe the process of producing electricity for one's own use, using either gas or furnace oil to stay operational.

However, the government installed IPP projects and forced industries to buy expensive electricity instead. Now, as gas prices have soared, industries have returned to using furnace oil — which has been so costly that operating production units have become nearly impossible.

He added that industries dependent on continuous electricity or cooling systems are in deep trouble.

Not only is electricity becoming more expensive, but even the shift to alternative sources has been made difficult, leading to high additional costs — a situation akin to industrial destruction.

Mian Zahid Hussain also highlighted the crisis facing local refineries, which are now struggling due to a sharp decline in demand for furnace oil.

This decline in demand has led to a surplus of furnace oil, which is expensive and complicated to export. If local refineries reduce production, it could impact the domestic supply of petrol and diesel, leading to potential shortages and price hikes for consumers.

He warned that gas companies are in crisis. Many industries have already stopped using gas, yet the government continues to insist on purchasing costly imported LNG. Meanwhile, domestic gas production is being deliberately restricted to make space for imported gas.

He stated that the growing circular debt is crippling the energy sector and dragging down industrial productivity, while unstable policies have shaken investor confidence. Aggressive tax enforcement is fuelling business unrest, and the government's failure to adopt energy reforms or engage stakeholders is hindering the development of sustainable solutions. Without a coherent strategy, ad hoc decisions can impair growth and lead to repeated bailouts.

He emphasized that not all policy decisions can be blamed on the IMF. The government itself has initiated many harmful policies without the involvement of the IMF.

He concluded by suggesting that if the government charts a serious growth path, aiming to expand the economy from $412 billion to $600 billion within a year, it could be a beacon of hope.

This growth trajectory would create jobs, increase tax revenues, and support industrial revival — all without harassing the business community. He questioned whether chasing $51 billion in tax revenue is worth compromising the nation’s long-term economic future.

Copyright Business Recorder, 2025