ISLAMABAD, JAN 29: The businessmen on Sunday rejected the sudden and heavy jump in prices of petroleum products in the country, stating the government has dropped a fuel bomb on the trade and industry by raising Rs35/liter oil rates in one go, followed by the electric hike shock of Rs4.46/unit under quarterly adjustment by NEPRA one week ago.
The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) former president and Businessmen Panel (BMP) Chairman Mian Anjum Nisar demanded of the government to withdraw the decision with immediate effect, as the conditions of IMF for the revival of the stalled loan program would shake the trade and industry in the long-run.
He said that the National Electric Power Regulatory Authority (NEPRA), on Jan 18, 2023, had approved increase in tariff up to Rs4.46 per unit on account of quarterly adjustment for the first quarter of financial year 2022-23. The tariff hike will place a burden of Rs4.938 billion on trade and industry on account of variation in capacity charges, variable operation and maintenance cost, and the impact of fuel cost adjustment on transmission and distribution losses for the first quarter (Jul-Sept) of FY23.
The FPCCI former president said that the decision would prove detrimental to the industries due to high cost of doing business and will also open the floodgates of inflation. In addition to making the electricity bills costlier and unaffordable for the consumers, the unexpected hike in oil prices would escalate prices of all household goods being widely used across Pakistan, he added. He said that the burden of the surge in oil price in the international market is immediately transferred to masses by the government but the process of reduction in the prices is always very slow.
He said that despite an inevitable increase in the prices that will unleash a strong wave of inflation, the government remains short of clinching a deal with the International Monetary Fund. On the other hand the NEPRA has increased the electricity rates mainly on account of fuel prices, capacity cost payments and the impact of rupee devaluation against the US dollar.
He condemned the National Electric Power Regulatory Authority’s decision to increase electricity tariffs, stating that the burden of power theft, mismanagement, and inefficiencies cannot be shifted to consumers on the pretext of fuel adjustment.
Mian Anjum Nisar, the Chairman of the Businessmen Panel, said that Pakistan’s industry had been harmed by the high cost of doing business, which discouraged investment in capacity and capability and called for easing the burden of heavy taxes on the power sector.
Anjum Nisar said that the economy of Pakistan, particularly the SMEs are striving to deal with the economic crunch and need to get support. Instead of providing subsidies or waivers, it is unjust to overburden the industries with a hike in the cost of production. An increase in petroleum products costs will further weaken the economic environment which is already under threat on various fronts.
He said that the oil rates have been on the declining trend in the international market now, but the government instead of passing on this benefit to the public, had increased their rates, which is very unfortunate.
If fuel would be heavily taxed, the entire economy would suffer unprecedentedly, he said, adding that petrol and HSD are two major products that generate most of the revenue for the government because of their massive and yet growing consumption in the country. The economy is already in a precarious situation, this constant back and forth will only increase volatility, when we ought to be heading for stability, he added. He said that the cost of doing business and cost of production have shot up to the level of un-competitiveness. The cost of borrowing was huge and capital financing has become more expensive.
The business leader said Pakistan exports cannot compete with China, Bangladesh and India where power tariffs were 7-9 cents, as the country’s exports have been witnessing a major setback in present days due to the high cost of electricity, which has become a major stumbling block in industrial development and boosting exports.
He said that fuel and electricity are regarded as the lifeline of any economy and play a pivotal role in the socio-economic development of a country.
Mian Anjum Nisar said that industries need low-cost energy to bring down their cost of production, keeping their goods competitive in the international market. He said that the government, in present circumstances, would have to reduce the price of electricity along with the cut in the prices of petroleum products to bring down the cost of doing business and to promote industrial activities.
He said that business activities were already in decline and in this situation the government should take serious steps to cut the cost of doing business, as hike in oil rates would further enhance the cost of production, making transport more expensive.