Business community voices deep concern over hike in fuel prices, power tariffs

KARACHI: The hike in oil and power prices will have an immediate negative impact on exports, production cost, transportation, essential commodities, and purchasing power of the general public, said business and industrial community.

They voiced deep concern over the unprecedented surge in petroleum product prices, marking an all-time high in the nation’s history.

They feel that another major impact will be on the production cost of agricultural products, as diesel is widely used for irrigation purposes.

Manufacturing industries are already suffering due to electricity tariff. They predict a domino effect of to the price hike of fuel on the entire economy, in addition to the recent price hike of power tariff.

Irfan Iqbal Sheikh, President FPCCI, has unequivocally stated that the government has no clue that what will be the socioeconomic repercussions of the third massive hike in petroleum prices as FPCCI can see the inflationary pressures to mount beyond the control of any sector or industry to absorb. Industrial shut downs, decline in exports, dwindling domestic demand, social unrest, unemployment and non-existent economic growth will follow, he added.

Sheikh maintained that the most glaring and worrisome aspect of the last few hikes is that the petroleum levy on petrol has now increased to Rs 60/ litre. This is bad economics in these times of stagflation and recessionary tendencies in the economy – as we need out-of-the-box solutions to stabilise the economy instead of taking ruthlessly counterproductive decisions, he added.

It is pertinent to note that previous day, the federal government unveiled yet another and third in a row massive hike in the petrol prices by Rs 14.91/ litre and HSD by Rs 18.44/ litre for first fortnight of September 2023 to make petrol Rs 305.36/ litre from Rs 290.45/ litre and HSD is now Rs 311.84 from Rs 293.40/ litre.

Irfan Iqbal Sheikh explained that the apex body forewarned the authorities many times over the last few months 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. Nevertheless, the authorities failed to listen to us; else, we would have more Russian crude by now, which is cheaper by a whopping 35–40 percent as compared to international markets today, he added.

FPCCI Chief reminded that just four week ago, the authorities have announced PKR. 7.50 per kWh raise in electricity prices; and, just about the same raise two weeks back in petroleum products, i.e., 6–7 percent, despite FPCCI’s repeated demands that electricity and petroleum prices should be stabilised by curtailing the distribution & line losses and reducing systemic inefficacies. He also questioned that how the export orders-in-hand can be met in a profitable manner after the triple blow of electricity tariff increase and petroleum price hikes thrice within a short-span of 4 weeks – resulting in uncertainty & price instability.

Sheikh 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 by a large margin.

Sheikh recalled that the government has missed all macroeconomic indicators & their targets for FY23 and, for FY24, as well; these continuing bad economic decisions will have a lasting effect on all economic performance indicators – be it exports, industrial production, inflation, employment generation and revenues.

However, President of the Korangi Association of Trade and Industry (KATI) Faraz-ur-Rehman in a resolute stand said that the KATI categorically rejects this alarming increase and calls upon the government to swiftly address the matter.

Rehman’s statement comes against the backdrop of growing apprehension within the populace regarding the deteriorating economic situation, which has left citizens feeling helpless.

He asserted that the government’s inability to curb inflation has exposed the people to the harsh conditions imposed by the International Monetary Fund (IMF), as well, as the unscrupulous practices of hoarders and profiteers.

Addressing the pressing concerns, he remarked that the populace is grappling with multiple challenges, including record inflation, surging electricity costs, and soaring exchange rates.

He reiterated his longstanding call for measures to lower electricity tariffs, emphasising that while both the public and the business community have been vocal in their protests, tangible actions to combat inflation remain elusive.

Expressing his grave concerns, President KATI warned that unless immediate steps are taken to lower petroleum prices, the ongoing inflationary spiral could push some individuals to contemplate desperate measures, such as suicide.

He lamented the lack of decisive actions in reducing electricity costs, a topic that has featured prominently in his previous statements.

Faraz reaffirmed KATI’s commitment to stand with its members during challenging times. Despite the formidable circumstances, KATI continues to advocate for its members by conveying their grievances to higher authorities. Furthermore, he condemned divisive tactics employed by a few vested interests within the business community, which have sought to create divisions for personal gain.

President KATI urged caretaker Prime Minister Anwaar-ul-Haq Kakar and caretaker Finance Minister Shamshad Akhtar to take emergency measures to provide immediate relief to the populace, cautioning that the nation’s economy is teetering on the brink of destruction.

The situation remains tense as citizens await government action in the face of mounting economic challenges.

Copyright Business Recorder, 2023