Business community opposes government's proposed gas tariff hike move

Business community, general public and small business owners have strongly condemned the government move to increase gas tariff from January 2020 for industries, residential consumers and tandoors.

Taking serious notice of the adverse impact of the move on cost of manufacturing and common masses who are already burdened with the price hike of essential commodities and which is feared to shoot up further following the price increase in gas prices.

They termed the recent move to hike in gas price an anti-people decision and said that it would further compound the miseries of both general public and business community.

They said that the government has forgotten the poor and added that such hike will put an additional burden over the people who are already facing hardships due to sky rocketing prices of the essential commodities.

"The increase in gas tariff has jolted the country's economy by increasing the cost of production in both agriculture and industrial sectors," they said. The increase in gas prices amounted to taxing the people and imposing a mini-budget on them and destroying the sanctity of the national budget.

President of Korangi Association of Trade & Industry (KAT), Sheikh Umer Rehan has expressed deep concern over proposed hike in gas prices by OGRA and termed any such decision a blow for industries in Pakistan. He said that already industries were facing troubled times due to higher production cost and higher tariffs of energy.

He said that in current situation industry could not afford any increase in utility prices due to already shooting production cost which had adversely affected our exports.

He was of view that gas price increase for industry, captive plants and CNG sector would widely affect the industry and the common people as well. He cited that with increased gas prices captive power plant would not remain feasible and this will lead interruption in industrial production and especially pharmaceutical sector where any disruption can cause challenges for public health.

He also mentioned that increase in gas prices for domestic user and roti tandoors would directly affect the general public. He urged Prime Minister Khan to consider the apprehensions of industry and people of Pakistan and drop any such consideration of gas price hike.

Economic & Financial Analyst, Ateeq Ur Rehman said the news of "Proposed whooping hike in Gas Tariff for Consumers from Jan 1 by 213.7%" to generate about Rs275 billion for SSGC and Rs244 billion for SNGPL as additional fund required is alarming. This hike is going to increase the cost of production of the manufacturing sector whether large, small or medium.

Also, if this proposal becomes a decision it will be an anti-people and anti-business move that would unleash a new wave of inflation in the country and cause further slowdown in the business activities. The wheel jam of Economic activities will further accelerate. This is going to be another burden on common man after already existing pressure of different tax collections, hike in interest rate, expensive USD and country's reliance on additional debts said Ateeq Ur Rehman

He added , on the one hand we are trying to curb Import and encourage Local Industry but on the other hand the enormous increase by regulators in gas prices as high as sky will be fatal for those who use gas as a primary fuel. It will reduce essentially the capacity building thus increasing the cost of doing business. Ateeq said that this is federal government's prerogative to determine this huge increase, which Government should consider from the point of view of ease of doing business.

He further said that as a matter of fact, the decline of exports, eventually growing trade deficits are due to huge cost of borrowing, expensive access to finance and raw material, surge in interest rate, etc leading to non fulfillment of export orders, inflicting massive financial losses and growing balance of payment crisis, owing to this, large-scale manufacturing already contracted for 7th month in a row raising fears of massive layoffs across the industrial sector.

Mohammad Hussain owner of small unit said that the entire trade and industry has rejected any such move to an abnormal increase of which would crush the industry that is already facing severe crises. He said that business community was awaiting reduction in gas tariff as per government's statement but OGRA has unilaterally decided to increase tariff to an exorbitant level which is in no way affordable to the industry, general public and owners of tandoors.

He further added that due to unjustified and motiveless policies the cost of doing business has gone high and as consequence various industrial units are working under-capacity and some have closed-down. He said this increase would have a killing effect on the industries that are gas dependant. This will cause decline in trade & commerce and will also lead to massive unemployment.

Another industrialist, Anwar Ahmed was of the view that it is mini budget and added that such harsh decision without consultation and consent of stakeholder may result in widespread discontentment in the business community. He said that the industry already facing tough completion in international market in general and with India, China and Bangladesh in particular.

Copyright Business Recorder, 2019