APBF flays frequent jump in petroleum and power prices

ISLAMABAD: The All Pakistan Business Forum (APBF) has rejected the frequent increase in prices of electricity, gas and petroleum products, saying the massive jump in electricity base rates and petroleum products prices would make local products uncompetitive in the international market. 

APBF President Syed Maaz Mahmood remarked that at a time of unsatisfactory export volumes and low industrial growth, the hike in electricity base tariffs for the industry, especially for the SMEs, was really surprising. If the decision is not withdrawn, it will prove dangerous for the country’s SME sector, he stressed.

He said that the ever-increasing cost of production in the country is the real threat to both large-scale manufacturing (LSM) and small-scale businesses (SMEs), as frequent upward revisions in policy rate and continuous fluctuations in rupee against dollar are posing further challenges for the economy.

APBF Chairman Ibrahim Qureshi while describing the government’s decision to increase electricity tariffs by Rs7.50 per unit as an incorrect move, urged the government to reverse the proposed increase. The government’s decision to increase the electricity tariff is anti-industry, and the APBF strongly condemns the government’s decision and calls on it to withdraw this move.

He said that the aggressive economic measures, high borrowing rates, inflation, oppressive taxation and unstable currency have been negatively affecting running businesses, many of which have closed their operations.

He said that with a view to deal with fiscal challenges the government will have to work on the three-way strategy by implementing short-term goals that will help to keep generating resources for smooth fiscal operations, medium-term goals where the government should focus on financial inclusion, documenting the economy by designing a system where all businesses can be registered and properly document their income including collection of sales tax, initiating the process of privatization as well as improving governance by introducing reforms in each sector.

Syed Maaz Mahmood said that the increase in base rate of electricity is also part of pact signed between government and IMF, which says that the government has to notify NEPRA’s determinations without any delay and amendment.  

He stated that on July 14, 2023, the NEPRA had already approved average rebasing in tariff of Rs. 4.96 per unit across the board. 

The APBF President observed that the abrupt disruption of concessions committed under various industry policies has resulted in decline in industry’s exports, which declined from $18.5 billion during FY2021-22 to around $16.6 billion during the outgoing FY2022-23. He claimed that export performance was severely set back by the drastic turn in macroeconomic conditions during 2022-23, of which the historic rise in bank lending rates; raw material and, retraction of concessional gas and electricity tariffs during the second half of the last fiscal year damaged prospects of export growth irreparably. 

He observed that the government’s ill planning and financial woes had multiplied the miseries of businesses which were facing unscheduled power outages across the country. 

He urged the government to identify system constraints and communicate targets to all concerned departments in order to launch the efforts to upgrade the transmission system. He said that the high cost of doing business has proved to be dangerous for Pakistan’s industry, discouraging investment both in capacity and capability. He stressed the point that this increase in power tariff would badly affect the growth of the SME sector, which is an important link of the textile value chain. The importance of a level-playing field can be estimated from the fact that 90 percent employment is in the SME sector and their growth results in the largest employment generation.

He said that the government is ignoring the fact that the gap between the generation and consumer cost is mainly because of power theft and inefficiency of the heads of power distribution companies. It is a disastrous decision, which will encourage electricity theft.