Industries reject gas price hike, warn of economic fallout

KARACHI: Industrial associations on Friday rejected a hike in gas tariffs approved by the caretaker government, saying it would hurt the already struggling sector and lead to more closures and job losses.

The SITE Association of Industry (SAI) and the Korangi Association of Trade & Industry (KATI), representing the two largest industrial zones in Karachi, demanded that the government withdraw the decision and lower the gas prices to make them regionally competitive.

Muhammad Kamran Arbi, president of SAI demanded that the caretaker Prime Minister Anwarul Haq Kakar, Federal Minister for Commerce, Industries & Production Gohar Ejaz and Minister for Energy Muhammad Ali take back the decision of the hike in gas tariff in the larger interest of the national economy and to save the industries from collapse. "In case the decision is not withdrawn, the industries will close down, resulting in a decline in exports and mass unemployment," Arbi said in a statement.

The SAI president said the business community was given an assurance for 9 cents per KWh electricity tariff by the caretaker government. "However, contrary to the assurance given, POL, electricity and gas tariffs have been increased constantly by the caretaker government."

Arbi said the national economy is passing through a severe crisis currently, and running an industry is no more a profitable business. “Unfortunately, the caretaker government has taken no step to provide a competitive environment to industries, lower the cost of production and reignite the engine of the national economy, which has left the industrial community in despair.” Arbi remarked.

The asked the caretaker government to review the decision of the hike in gas prices and reduce them taking into consideration the ground realities. "The utilities prices should be fixed after thorough consultation with stakeholders, and justifiable as well as regionally competitive so that industrial activities continue without a hurdle, which would ultimately have a positive impact on the national economy and exports. In case the gas tariff is not lowered, it will have a negative impact on the country’s exports."

The Korangi Association of Trade and Industry (KATI) also 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.

Johar Qandhari, president KATI expressed concern over the already elevated production costs in the region, rendering industrialists less competitive compared to their counterparts in neighboring countries.

Highlighting the industry's prior demand for a reduction in gas prices from Rs2,100 to Rs1,800 per MMBTU, Qandhari underscored that the recent government decision to raise prices to Rs2,700 to Rs2,900 per MMBTU intensifies the challenges faced by the industrial sector.

The KATI chief warned that the continued escalation of gas prices could result in the closure of numerous industries, amplifying unemployment rates and diminishing Pakistan's export capabilities and appealed to the government to reverse this decision promptly and establish a fixed gas price of Rs1,800 per MMBTU for industries.

Emphasizing the need for the government to explore and provide affordable energy alternatives for the industry, Qandhari stressed that such measures are crucial for ensuring the competitiveness of Pakistani products the global market. As the industrial sector grapples with the ramifications of the gas price hike, President Johar Qandhari's stance advocates for the preservation of industrial stability and the prevention of potential economic setbacks for Pakistan.