F.P. Report
ISLAMABAD: The Federation of Pakistan Chambers of Commerce & Industry’s Businessmen Panel has warned that the continued escalation of energy prices could result in the closure of numerous industries, amplifying unemployment rates and diminishing Pakistan’s export capabilities, appealing to the government to reverse the decision promptly and establish a fixed gas price for industries.
The FPCCI former president and Businessmen Panel (BMP) Chairman Mian Anjum Nisar, emphasizing the need for the government to explore and provide affordable energy alternatives for the industry, stressed that such measures are crucial for ensuring the competitiveness of Pakistani products in the global market. As the industrial sector grapples with the ramifications of the gas price hike, the BMP leader’s stance advocates for the preservation of industrial stability and the prevention of potential economic setbacks for Pakistan.
He said that the repeated increase in the gas and electricity prices to an unbearable level by the government has left the trade and industry uncompetitive; blaming it for trapping the country in the IMF plans.
The FPCCI former president, strongly opposing gas price surge, said that the gas tariff hike has threatened the industrial sector, besides increasing unemployment, saying that the every government had poor economic policies that unleashed the free fall of rupee against the dollar, ensuing in input cost escalation to pull down the manufacturing growth.
The BMP Chairman condemned the recent increase in gas tariff as approved by the Economic Coordination Committee and the caretaker govt. He has demanded the government to take back the decision of hike in gas tariff in the larger interest of national economy and to save the industries from collapse. He warned that in case, the decision is not withdrawn; the industries will close down, resulting in decline in exports and mass unemployment.
In an appeal, he said that the business community was given assurance for 9 cents per KWh electricity tariff by the caretaker government. The assurance brought a sigh of relief and hope for the business community that the new tariff will help in reduction of production cost and they will be able to continue production unabated and deliver export orders on time. However, contrary to the assurance given, POL, electricity and gas tariff are being increased constantly by the caretaker government. He said that currently, the national economy is passing through severe crisis. To run an industry is no more a profitable business. He questioned the Caretaker Prime Minister as to how economy of the country can be stabilized and strengthened in the absence of industrial and business activities? Unfortunately, the caretaker government has taken no step to provide competitive environment to industries, lower the cost of production and reignite the engine of national economy, which has left the industrial community in despair, he remarked.
He vehemently rejected the recent surge in gas prices, asserting that this decision poses a severe threat to the industrial sector, potentially leading to increased unemployment. He expressed concern over the already elevated production costs in the region, rendering industrialists less competitive compared to their counterparts in neighboring countries.
Showing their profound concerns, he said that the country’s exports have nosedived comparatively by 12.71 percent from $31.78 billion, citing the harsh factors, which is hurting the industry.
This is 16.61 percent decline to the export target of $32.35 billion set for the fiscal year 2022-2023, he said that the export-oriented industries are faced with the greatest ever challenges in terms of the highest cost of manufacturing. Many industries, he claimed to have already stopped their production in the country with several others fearing a closure because of the unviable trade, which may also pulled the country’s exports further down.
The rulers have raised gas tariffs to the highest ever levels by 118 percent from August 2023 and added on with a 40 percent cost of RLNG. This move overall gave a steep rise of 191 percent to the gas prices to the historic levels, he added. The exports industry is also compelled to pay the exorbitant gas price, which is tagged with the cross subsidy that the fertilizer, feedstock, domestic consumers and power generation sector enjoy, he pointed.
Mian Anjum Nisar said the government should prioritize resolving the energy crisis by providing sufficient and affordable electricity and gas to industries. The import bill should be reduced by imposing bans on luxury products. He highlighted controlling inflation to ensure affordable living costs for the masses and containing the cost of production for businesses at a local level.
He stressed the need for a revisit of the economic policies, as the economic indicators throughout the 2023 remained very depressed amidst high inflation, low exports, depleting foreign reserves and continued uncertain position of the local currency.
FPCCI former president Anjum Nisar said that almost all indicators of the economy continued to show poor performance during 2023, including volatile exchange rate, unprecedented hike in markup rate, repeated increases in electricity rates, gas shortage, price spiral, mismanagement and bad governance, becoming the hallmarks of the government.
He said that massive fall of rupee value continued to damage the economy, as the rupee witnessed a huge depreciation; one of the highest devaluations of local currency in Pakistan’s history in this period. Mian Anjum urged the policy makers to concentrate on increasing tax-to-GDP ratio which was the lowest in Pakistan in the region in 2023.
