KARACHI: Khalid Tawab, Chairman of the Iron & Steel Merchants Association, warned that the Pakistani economy is at risk and industries are on the verge of collapse due to uncompetitive with neighboring countries. Exorbitant energy prices have forced many association members to shut down their mills, he said.
"The recent hike in electricity and gas charges for industries has made it unaffordable for our members to continue production and business activities, Tawab stated. We urge the government to reduce the power tariff to 9 cents/kWh and markup to 15% to revitalize the economy, boost exports, investment, and employment.
Tawab emphasized that prompt action is necessary to stimulate industries across all sectors, lest the unemployment rate spirals out of control.
Khalid Tawab also demanded that the government immediately abolish all agreements with IPPS and procure electricity for the national grid from cheaper and cost-effective sources without any strings attached, such as capacity charges.
The IPPS are charging Rs24 per unit in electric bills as capacity payments, which will continue to increase, he said. We are sinking under their present Rs2 trillion capacity payment charges for their shut and partially operational IPPS. We can get relief and move forward by canceling all agreements with IPPs without any further loss of time, as they have severely paralyzed the national economy, Khalid said.
He highlighted that Pakistan has an installed generation capacity of over 40,000 MW, while peak demand and transmission capacity is merely 25,000 MW, resulting in significant excess capacity.
He stated that providing electricity at 9 cents/kWh would result in a significant increase in exports (USD 6 billion), additional demand on the grid (300 MW), revenue generation (Rs500 billion), and a reduction in debt servicing (Rs240 billion).
Tawab stressed the need for the government to engage with stakeholders, address their grievances, and create a level playing field and business-friendly environment.
He also called for a reduction in bank interest rates, citing the current 12 percent inflation rate. The business community can contribute significantly to tax generation if given the opportunity, Tawab added.
Copyright Business Recorder, 2024
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