Power and gas load shedding: SBP report confirms industrialists' difficulties: MCCI

President of Multan Chamber of Commerce and Industry (MCCI) Anis Ahmed Sheikh has said that state bank quarterly report had confirmed that industrialists were rightly making hue and cry on the grim industrial situation due to power load shedding, suspension of natural gas, high mark-up, severe energy shortages, deterioration in law and order situation and rupee depreciation and less demand of exportables from foreign buyers.
He said that production, especially large-scale manufacturing (LSM), continued to decline during the first quarter of fiscal year 2008-09, registering a negative growth of 6.2 percent against growth of 7.3 percent in the same period last year, power shortages have been haunting all manufacturing sub-groups in FY08-09.
He said that textile sector, in particular, was jolted by other multiple shocks firstly because it is an export-driven sector and impact of weak external demand fell disproportionately on it. Secondly, poor law and order situation diverted importers of Pakistani products to search for new suppliers. Thirdly, rising cost of raw materials, and fourthly as imported inputs go into textile production process, a high degree of volatility in domestic currency value created problems of costing and pricing.
Anis Sheikh said that report further reveals that both agro-based and other industries registered a decline in production. This classification also highlights the fact that LSM sector has been unable to achieve significant growth without good performance of these two sections of industry, even with high growth in the recent past. Within the non-agri based industries section, consumer durables (cars and jeeps, motorcycles, refrigerators, deep freezers, TV sets, air conditioners, etc) registered a decline of 31.2 percent in production. But when the decline in consumer durables is excluded, the negative growth in LSM production reduces to only 0.8 percent. Not only has the increase in interest rate on consumer financing hit the production of consumer durables, but a sharp rise in their prices has also led to a drop in the demand. Growth in electronics, in particular, suffered due to increased electricity tariff and power shortages in the country.
In addition, demand for consumer durables eased as increase in international prices of steel products and rupee depreciation compelled manufacturers to increase the prices of durables, while the surge in inflation eroded the purchasing power of middle class consumers (major market segment of durables). Engineering sub-sector registered considerable growth on the basis of higher production in safety razor blades, diesel engines (multiple uses of diesel engines in agri sector) and wheat threshers (thresher demand rose expecting bumper wheat crop), he said.