KARACHI: Industrialists have strongly opposed the proposed gas price hike, urging the federal government to reconsider in order to protect export-oriented industries and small and medium enterprises (SMEs).
They warned that such an increase would severely impact these sectors, ultimately resulting in significant losses to the exchequer.
Recently, the Oil & Gas Regulatory Authority (Ogra) has requested the federal government to increase gas rates by up to 26 percent to generate about Rs. 847.33 billion during the current fiscal year. Under the new tariff structure, the average gas price has been set at Rs. 1,762.51 per MMBTU for Sui Southern Gas Company (SSGC), and Rs1,778.35 per MMBTU for Sui Northern Gas Pipelines Limited (SNGPL).
Ogra recommends significant hike in gas prices
Industrialists and exporters reiterated that the overall cost of production remained high, including high electricity prices, logistic and labor costs, multiple taxes, etc. As a result of any drop in production and export receipts due to higher utility cost, the revenues of the government will go down from profitable companies.
Ijaz Khokhar, the former Chairman Pakistan Readymade Garment Manufacturers and Exporters Association (PRGMEA) said the proposal of the fresh hike in gas prices will impact negatively the competitiveness of value-added and export products of the country in the global market.
He mentioned that the exports of value-added products mainly textile sector witnessed a revival with a 10 percent growth in the current financial year despite multiple challenges and issues, yet, the exporters of the value-added sectors were shocked again by the bad news.
“Dyeing units of the textile sector are already facing frequent interruptions in gas supplies these days, however, they are managing their production for foreign clients through multiple alternate resources,” he said and added that with the increase in gas prices, the production cost will spiral up, and the price of made-in-Pakistan finished products will further go up.
The value-added sector fetches precious foreign exchange for the country, which has more value than increasing the revenue of gas utility companies through upward revision of the gas prices, Khokhar said.
The government should consult with the stakeholders in bringing stability to the economy, instead of making unfavorable decisions for the business and the country, the former PRGMEA further stated.
President Federal B Area Association of Trade and Industries Shaikh Muhammad Tehseen urged the government to refrain from a fresh hike in the gas tariff to prevent small and medium-sized industrial units from further destruction and closure.
Over the past couple of years, the SME sector suffered huge losses due to the increasing cost of production, mainly due to higher prices of utilities including electricity and gas. Further, higher taxation on the salaried class in the last budget also made it challenging for SMEs to retain competent human resources at present salaries.
There is no particular incentive or facilitation for SMEs similar to the corporate sector and major industrial groups, including financing schemes and tax reliefs, on the contrary, the government is bent on creating a difficult environment for doing business and entrepreneurship across the country, he added.
The government should realize the far-reaching impacts of the increase in utility prices that could cause a steep decline in production and retrenchment of jobs within the industries, President FBATI added.
Copyright Business Recorder, 2024