Closure of industrial units

Sindh's closure of 81 industrial units due to power issues reveals government failures

The revelation that 81 industrial units in Sindh closed down between 2018 and 2023 due to power supply problems is an embarrassing mark for the PPP-led provincial government, and the PML-N and PTI-led federal governments in the corresponding period. While some closures can be attributed to the market itself - uncompetitive or poorly managed units going out of business - several of the closed units were in sectors such as sugar, which has reliably high consumer demand and is not particularly competitive, meaning most mills that can keep production going can also stay profitable.

Unfortunately, all industries need power, and many units cannot afford to set up captive power plants or other alternative energy sources, leaving them reliant on the national grid. The power crisis in Sindh and other parts of the country over the past few years has significantly disrupted industrial activities, as companies that were already feeling the pinch due to rising energy costs could not even rely on consistent supply to help make up for narrower profit margins through higher sales. In fact, power outages meant that production volume often fell, leading to lower sales and lower profits, or even losses.

Moreover, it is essential for the government to provide transparent and comprehensive information regarding the status of industrial units, both in terms of closures and new establishments. Clarity on these matters will enable better understanding and informed decision-making. Collaborative efforts between the government and industrialists are essential to find long-term remedies and prevent further closures.

At the same time, it is worth noting that the closures represent only a small fraction of the total 6,856 industrial units operating in the province, and in fact, closures were dwarfed by new openings - at least 915 units. However, given the fact that one of the many crises plaguing the country is a jobs crisis, policymakers still need to ensure that industries stay open and continue to expand, as they provide exactly the kind of relatively well-paying jobs that low education workers desperately need.