President of Karachi Chamber of Commerce and Industry (KCCI) Younus Muhammad Bashir while expressing deep concern over descending exports and the reports of further increase in gas tariff from July 1, 2016, urged the government to immediately withdraw Gas Infrastructure Development Cess (GIDC) from the date it was implemented and also withdraw the recently implemented 23 percent increase in gas tariff in order to save Pakistan's exports from further deterioration.
In a statement KCCI chief warned that if appropriate steps were not taken immediately, there will be further decline in terms of exports, especially in the value-added sector. Younus Bashir requested the Ministry of Petroleum and Natural Resources and the Ministry of Finance to seriously look into the production and exports, particularly in textile sector that has gone down by 14 percent which is very alarming.
Referring to a recent announcement by the Petroleum Planning and Analysis Cell of Ministry of Petroleum and Natural Gas, Government of India, KCCI president informed that it has announced a reduction of 20 percent from April 1, 2016 to September 30, 2016 and the new rate of $3.06/MMBTU on Gross Calorific Value (GCV) basis has been notified by the Indian government which will bring in more competition and will result further decline exports of Pakistan. It is pertinent to mention here that the Indian gas tariff rate was already eight percent lower as compared to Pakistan which has been reduced further by 20 percent, bringing gas tariffs down to around Indian Rs 321/MMBTU whereas in Pakistan, the gas tariff stood at an exorbitant level of Rs 488 plus GIDC of Rs 100 and 23 percent increase in tariff, escalating it to Rs 700/MMBTU, which indicates a difference of around 56 percent.
"It is needless to mention that other challenging aspects remain unresolved including zero rating of export oriented sectors, resolution of pending sales tax refunds, resolution of DLTL claims, Customs rebates and other pressing problems which have already enhanced our cost of manufacturing", Younus Bashir added. He urged Prime Minister Nawaz Sharif, Federal Finance Minister Ishaq Dar and Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi to immediately withdraw GIDC from the date it was implemented and also withdraw 23 percent increase in gas tariffs in order to create an enabling environment for Pakistani exporters who have been facing stiff competition and find it very difficult to stay afloat due to high cost of manufacturing.-PR