Businessmen warn of industry shutdown

KCCI leaders say exports will be halted in series of protests in port city

KARACHI:

Business leaders in Karachi have warned that if the gas tariff is not reduced to Rs1,350 per mmBtu, industries will be forced to shut down, and exports will be halted gradually in a series of protests throughout the port city, Karachi. This warning came during a press conference at the Karachi Chamber of Commerce and Industry (KCCI), where representatives from various sectors expressed solidarity with the chamber and supported the demand.

Wearing black armbands and displaying banners outlining their demands, the business community insisted on a fair gas tariff of Rs1,350 per mmBtu, strongly rejecting the current gas tariffs ranging from Rs2,100 to Rs2,600 per mmBtu. According to them, the new gas tariff unfairly burdens industries with cross-subsidies for sectors like fertiliser, domestic, and power, which they find undeserving.

Business Group (BMG) Vice Chairman Jawed Bilwani outlined their course of action, stating, “Today’s press conference will not be the end of the story.” He announced a series of press conferences, protest banners displayed across industrial zones, and a weekly observance of a “no export day.” If the government does not address their demand by the first week of December, they plan to escalate the protests, including shutting down industries for one, two, or even three days a week.

Bilwani expressed disappointment that despite repeated appeals through newspapers, no top government officials have visited the KCCI to address the issue.

Highlighting the disparity in gas tariffs, Bilwani pointed out that the gas tariff for the fertiliser sector in a neighbouring country was $6.5 per mmBtu, whereas in Pakistan, it is provided at a much lower rate. He criticised the subsidy given to the fertiliser sector, which he claimed was being smuggled, describing it as equivalent to smuggling gas.

“Nowhere in the world are export/import substitute industries burdened with cross-subsidy to benefit other sectors. Instead, they are facilitated to lower their cost, enabling them to compete globally and enhance exports,” Bilwani stated. He also underscored the business community’s anticipation of the promised winter package for incremental electricity consumption, which was agreed to provide at a reduced tariff of Rs20 per unit during the winter season.

Read Karachi protests inflated bills

BMG Vice Chairman Anjum Nisar lamented the closure of the Hyderabad glass bangle industry and warned of a similar fate for all industries in Karachi. He urged the government to devise a strategy to safeguard and promote Small and Medium-Sized Enterprises (SMEs) and larger industries, rather than implementing ill-advised initiatives that could lead to their closure.

KCCI President Iftikhar Ahmed Sheikh said all industries in Karachi have been on the verge of a complete collapse. The government has to understand that a surge in industrial and captive gas tariffs, ranging from 100% to 130%, will be highly detrimental to the economy. This could lead to industry closures, layoffs, a rise in street crimes, and the bankruptcy of manufacturing units.

“The unwise move to raise gas tariffs will badly hit value-added exports, and industrialists will have no other choice but to revert back to exporting raw materials, providing a perfect opportunity for competitors to easily take over Pakistan’s export share,” he said.

Published in The Express Tribune, November 22^nd, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.