Karachi, The Karachi Chamber of Commerce and Industry (KCCI), in collaboration with seven major industrial town associations of Karachi, have jointly and vehemently opposed the significant surge in gas tariffs proposed for export-oriented and general industries. Labeling the hike as ‘unfeasible’, they have implored the Prime Minister and the cabinet to reconsider and reset the gas tariffs to more manageable levels, cautioning that the current trajectory may lead to significant economic repercussions for Karachi’s industries.
According to a news release by Karachi Chamber of Commerce and Industry (KCCI), the joint statement from the organizations, including the likes of Site Association of Industry and Korangi Association of Trade and Industry, termed the increase in gas tariffs as potentially catastrophic. Their main concern was that over 90 percent of export-oriented and general industries in Karachi might be unable to bear this tariff escalation. The probable shutdown of these industries could significantly dampen both exports and local production, putting additional strain on an already fragile economy.
The statement went on to detail the exact increments, revealing an 86 percent hike for export-oriented industries, positioning the tariff at Rs2050 per MMBtu. In contrast, general industries saw a 117 percent rise, amounting to Rs2600 per MMBtu. Moreover, an additional 10 percent is expected to be appended due to the blended cost of RLNG. Consequently, the tariffs for export-oriented industries might hover around Rs2300 per MMBtu. Such increases might undercut Pakistan’s competitive edge in global markets, as products become more expensive. The release also indicated that the rates proposed by the Oil and Gas Regulatory Authority (OGRA) were significantly more moderate than those recommended by the Economic Coordination Committee (ECC).
Furthermore, the associations emphasized the dependency of value-added textile industries and many others in Karachi on gas, leaving little room for alternate fuels. They also highlighted the potential adverse impact on 54 percent of the country’s exports emanating from Karachi’s business community.
The statement additionally questioned the rationale behind industries shouldering cross-subsidies, Unaccounted for Gas (UFG), and other burdens, especially given the steep 127 percent proposed increase in gas tariffs.
The associations highlighted that the substantial gas tariff might deter local industries from diversifying under the Special Investment Facilitation Council (SIFC), a recent government initiative. They concluded by requesting a meeting with the Prime Minister to present their case and elucidate the potential fallout of the proposed gas tariffs.
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