KARACHI/ISLAMABAD-FPCCI President Irfan Iqbal Sheikh has strongly condemned the massive hike in petroleum products. It will further fuel the inflationary pressures resulting in further increase in cost of living and cost of doing business – which is already the highest in the entire region, he added.
Irfan Iqbal Sheikh explained that he forewarned the government much before that they need to address the teething problems in the import of the Russian crude, i.e. handling of oil cargoes; adjustments required vis-à-vis refining processes and commercial transactional procedures to settle oil payments. “Nonetheless, the government failed to listen to us; else, we would have more Russian crude by now, which is now more than 30 percent cheaper as compared to international markets today,” he added.
Irfan Iqbal Sheikh particularly highlighted that the international oil markets are in a flux and instability; and, all national & international economists agree that the demand for the petroleum products internationally will remain low for a couple of years due to slowing down of the global economy. That should have convinced the economic managers of the country to hold such an enormous, counterintuitive and counterproductive raise in petroleum prices – while, the domestic demand by refineries will not even cross 150,000 barrels / day for the imported crude due to unprecedented slowing down of the national economy. Irfan Iqbal Sheikh reminded that just last week the government has announced Rs 7.50 per kWh raise in electricity prices despite FPCCI’s repeated demands that electricity and petroleum prices should be kept stable – if not subsidized or reduced for the export-oriented industry. He questioned that how the existing export orders can be met in a profitable manner after the double blow of electricity and petroleum price hikes?
FPCCI chief has expressed his profound concerns that domestic and international demand for Pakistani products will be at an all-time low as inflation has severely affected the purchasing power of the domestic consumers and, for international & regional markets, Pakistani products have become uncompetitive. Government policies make no economic sense, he added. Irfan Iqbal Sheikh recalled that the government has missed all macroeconomic indicators & their targets for FY23 and, for FY24, these two bad decisions will have a lasting effect on all economic performance indicators: be it exports, industrial production, inflation, employment generation and revenues. Irfan Iqbal Sheikh expressed his dismay that the Prime Minister and his economic team is running the economic affairs in a consultation-less manner; and, being the President of the apex body, he is under mounting pressures from all 250 chambers, associations and trade bodies to raise their voice through FPCCI.
Meanwhile, the Islamabad Chamber of Commerce and Industry (ICCI) has termed massive hike in petroleum prices as a blow to the economy. Ahsan Zafar Bakhtawari, President Islamabad Chamber of Commerce & Industry (ICCI), said that the government has made a massive hike of almost Rs.20 per litre in the prices of petrol and diesel, which would prove to be a blow to the economy. He said this while addressing a meeting of the business community.
He said that it would unleash a new wave of high inflation and further increase the cost of doing business in the country. The decision would badly squeeze the purchasing power of the already crushed common man leading to a sharp decline in the growth of business activities. The government has also hiked electricity price by Rs.7.5/unit that would multiply the production cost. He said that the price of petrol has jumped from Rs. 227/litre on 1st August 2022 to almost Rs.273/litre on 1st August 2023. Similarly, the price of diesel has surged from Rs.245/litre on 1st August 2022 to more than Rs.273/litre on 1st August 2023. This unprecedented hike in POL prices would multiply the energy and transport costs and further increase the cost of doing business due to which trade and industrial activities would badly suffer. He urged that the government should reconsider such decisions to save people, businesses and the economy from their devastating consequences.
Ahsan Bakhtawari said that the SBP has already increased the policy interest rate to 22 percent, making credit cost unaffordable for the business community. The recent hikes in POL and electricity prices would make our products very uncompetitive in the international market and cause decline in our exports. He wondered who would do business and invest in Pakistan in an environment of frequent hikes in the utility tariffs and POL products. He stressed that the government should make drastic cuts in all non-development expenditures and reduce the profit margins of OMCs instead of putting an unbearable burden on the masses and the businesses. He urged that in these difficult times, the government should avoid taking harsh measures and focus on promoting ease of doing business to improve exports and steer the economy out of current challenges.
Faad Waheed, Senior Vice President, and Engr. Azhar ul Islam Zafar, Vice President ICCI, said that the repeated hikes in the POL prices and utility tariffs would shatter the confidence of investors who needed stable prices and tariffs to make long-term investment decisions in Pakistan. They urged that the government should reconsider the latest hikes in POL and electricity prices to save the masses, businesses and the economy from further troubles.