The industrialists have strongly opposed the government's move to increase gas tariff for industrial consumers, saying it would kill the industry and put unbearable burden on manufacturing cost.
President of Pakistan Businessmen and Intellectuals Forum (PBIF) Mian Zahid Hussain has said the gas price hike would further increase inflation rates making common man and businesses to suffer alike. He said most of the industries across Pakistan would get directly affected and their production and manufacturing cost would also go up exorbitantly. Even simple market products will become expensive resulting in lesser exports overall, he said, adding that the government had already increased gas tariffs by 143 percent in October 2018 and now again OGRA seems determined to soar the prices by 75pc to 80pc and the new rates would be implemented from July 1, 2019.
Mian Zahid said an increase of Rs732 per MMBTU of gas price was proposed by SNGPL even though the frequent hike in gas prices already destabilised energy and power sectors which affected not only people but also industries, economy, transportation and investment potential negatively.
PBIF president apprehended that any further gas price hike might lead to destabilisation of CNG sector. He urged the government to promote a preference for CNG usage over the oils (petrol and diesel) in the transportation industry so that CNG industry could earn substantial revenues to cover their rising CNG production cost. He said it would earn US$ 1 billion for the economy of Pakistan.
"Preferring CNG to imported Oil will also stabilise energy mix with the reduced imports bills," he said, adding that incremental gas prices were very concerning. He cited a survey that stated that in Karachi alone, there are more than 1000 industrial units and their production totally depends upon natural gas.
He said that every year, common man have to bear the expense of gas thefts of more than Rs 50 billion as Rs 25bn to Rs 30 billions losses are showed by SSGC and SNGPL. He urged that line losses and gas thefts should be contained instead of increase in the gas price.
Mian Zahid suggested facilitation should be extended to investors and industrialists so that they could achieve their targets with profitability. He said investors would immensely suffer if the much-trumpeted rise in gas price tariffs would be approved.
On the other hand, a meeting of all sectors of general industries (non-zero rated) was held at General Industries Forum of Pakistan (GIFP).It stated that any further increase in gas rates for general industries was not economically viable and would lead to shutdown of manufacturing units.
It urged the federal government to ponder upon GIFP viewpoint on the issue:
"General industries substitute imports worth approximately US$100 billion. Textile exports are only 14 billion; therefore, there should be no discrimination in gas rates between zero rated and non zero rated sector as a dollar saved is a dollar earned. There should be no cross subsidy, where general industries are charged extra on account of subsidy to other categories of consumers. Every sector should bear the cost of gas and federal government must provide relief or subsidy directly to that sector if required.
"General industries are paying the highest rate of gas @ Rs 780 per MMBTU, whereas the zero rated industries are paying Rs 600 per MMBIU. Major revenue contribution in federal budget comes from general industries through withholding taxes, sales tax, income tax and excise duties; even then the general industries sector is being neglected and over burdened.
"General public has not purchasing power to absorb any further increase in the cost of products. Any hike in gas prices will drastically reduce the sale revenue of general industries thus affecting the government tax collection.
"The UFG losses of Rs 48 billion should be controlled and a 3 year plan of UFG reduction must be enforced by both SSGC and SNGPL to bring down losses of 15pc UFG to international standards of less than 1 percent and it should be monitored on monthly basis by Ogra and all stake holders."
The GIFP urged federal government must revisit the decision of gas price hike for general industries prior to shutdown of over 2000 industrial units and unemployment of more than 1 million labour force. The industrialists said repeated increase in the gas price in recent past badly eroded Pakistan's competitiveness due to which, country was losing attraction for investment and this situation would further destabilise the economy.
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