The imminent threat of a complete production shutdown by Karachi’s industrialists casts a stark light on the unprecedented surge in gas tariffs imposed by the caretaker government. This looming cessation, scheduled for December 4th, symbolises the severe economic repercussions rippling through Pakistan’s economic hub. The estimated daily export loss of $47 million underscores the substantial impact these tariffs have on the city’s economic backbone.
The business community’s fervent demand to reverse the gas tariff hikes reflects an urgent cry for economic respite. Karachi’s industries, accounting for 60% of the country’s total exports, are burdened by exorbitant gas tariffs ranging between Rs2,100-2,600 per mmBtu. This hike has made it implausible for industries to sustain operations, risking the livelihoods of countless workers. Jawed Bilwani, the Vice-Chairman of the Businessmen Group, emphasised the necessity of reducing gas rates to Rs1,350 per mmBtu, a rate aligned with Ogra’s determination and feasible for sustaining industrial operations.
The industry’s frustration over perceived unfair subsidies to other sectors, particularly the fertiliser sector, exacerbates their plea. The business community contends that while they are willing to pay a reasonable gas tariff, the current rates involve cross-subsidisation to other sectors. This unfair distribution of subsidies has become an added burden, exacerbating the challenges Karachi’s industries face.
Karachi’s industries are grappling not only with high manufacturing costs but also with an unbalanced and unsustainable energy pricing strategy. The plea for equitable energy pricing is resonant. Muhammad Kamran Arbi, President of the SAI, stressed the necessity of a consensus on gas prices, highlighting that the existing tariffs have exceeded manufacturing costs, along with high manufacturing costs which have already hampered Karachi’s industries, emphasising the immediate necessity of withdrawing the gas tariff hikes to an acceptable level.
A collaborative dialogue between the government and industry stakeholders is vital to address these concerns. A measured approach to revise gas tariffs in line with Ogra’s recommended rates, coupled with an equitable distribution of subsidies, will not only salvage Karachi’s industries but also fortify Pakistan’s economic backbone. Failure to heed this plea for economic relief risks irreparable damage to the country’s economy and its global competitiveness.