The government's decision to reduce axle load limit by 50 percent will have severe impact on Pakistan's economy as the industry estimates at least 200,000 additional trucks needed to cater timely transportation of heavyweight or bulk products and raw materials.
According to a transporter, currently Pakistan has approximately 330,000 trucks on the road (310,000 trucks and 20,000 oil tankers). Pakistan's domestic trucks production is approximately 9000-10,000 units per annum and at that rate it will take at least 20-25 years to meet Pakistan's trucks demand domestically.
Else, it would take around $12.5 billion and at least 2 to 3 years to import the required unit of trucks, resulting in a huge slowdown of economic cycle that would affect every economic and social sector. Moreover, an additional $4 to 5 billion would be required annually to import oil for additional 200,000 trucks.
Besides transport industry, the oil industry will also face many challenges due to this limitation, he said.
"Approximately 20,000 oil tankers are used to transport oil within the country out of which 10,000 oil tankers are axle load compliant," said a source in transport industry. "Pakistan would need another 5000 oil tankers to meet the fuel requirement creating around 20-25% fuel shortage in the country," he added.
"The steel industry imports almost 100% of raw material, therefore, axle load regime will increase the transportation cost by 100% (from port to factories across the country)," said the source adding that it will definitely hike prices of steel.
Cement industry also fears that the axle load limitation will hurt the already under pressure sales. It is to be noted that the cement industry's average annual domestic sales are 42 million tons with an approximate revenue contribution of Rs 158 billion (sales tax and FED revenue) to the government. However, the industry is anticipating more than 50 percent reduction in sales. "Not only the transportation cost of finished product will be increased but higher freight of raw material will also leave the manufacturers with no option but to increase cement prices, hence slowing down the entire construction industry including infrastructure projects like dams, roads, and bridges," said a source in the cement industry.
"This will also result in a revenue shortfall of more than Rs 70 billion per annum under the head of sales tax and FED," he added.
An economic expert said that the shortage of trucks will result in the loss of millions of skilled and unskilled jobs in all 45 plus industries in Pakistan. "This would also lead to oil price hike, black marketing, and high industrial and commuting cost. The higher freight will result in higher prices for commodities to badly impacting common man's life," he added.
"A huge decline in consumer spending will directly affect the indirect taxes on all the consumer's products," said the source. "One axle load, in short, can lead Pakistan into a complete chaos and civil unrest and more than a trillion rupees revenue shortfall for the government," he concluded.