Tariff raise severe threat to growth

KARACHI - President, Karachi Chamber of Commerce and Industry, Abdul Majid Haji Muhammad has expressed deep concern over the decision of OGRA to allow Gas Companies to increase gas tariffs by 18 per cent.
Abdul Majid, in a statement, termed the decision as one-sided and criticised the apathetic attitude of the concerned quarters.
He recalled that in the hearing of SSGC in OGRA for proposed reduction of gas and proposed hike in tariffs, wherein KCCIs representative, Dr Qazi Ahmed Kamal conveyed the reservations of the chamber for the interest of industry but in vain.
Abdul Majid observed that SSGC ROA at 17 per cent is the main culprit based on which all tariffs calculation are being tabulated, which means SSGC is guaranteed 17 per cent rate of return on its assets which in todays economy are unthinkable.
He said that this should not be more than 10 per cent at maximum thereby eliminating the need for any tariff escalation as being observed in the case of WAPDA approximately at 12.5 per cent.
He was of the view that such harsh decision without consultation and consent of stakeholders may result in widespread discontentment in the business community.
The closure of industry, due to detrimental affect of high cost of production due to higher utility tariffs will lead to flight of capital, massive unemployment and decline in the revenue of government, he stated.
Abdul Majid observed that the said increase will pose a killing threat for the industry owing to highest-ever tariffs of utilities in the history of Pakistan.
The cost of production has gone exorbitantly higher absolutely due to unjustified policies of OGRA and NEPRA.
The chamber chief said that on one side government is contemplating the targets for nominal growth of 2.5 percent and on the other side its harsh decisions to increase utility tariffs are posing severe threats for achieving the said target.
At present, country is going through a very serious economic crisis in terms of escalating cost of production based on continuous rise on the utilities.
The dollar has depreciated in the international market, oil prices have stabilized, interest rates and inflation started decreasing. In wake of such indicators, it is unjustified to enhance the tariffs, he lamented.
Abdul Majid demanded that government must negotiate with foreign companies for favourable conditions; and interests of the business community should at the forefront of OGRA decisions rather than that of foreign companies earning huge profits from Pakistan and sending foreign exchange to their respective countries.