Karachi, Lahore, Faisalabad, Gujranwala, Sialkot stirred

Jan 09 - 22, 2006

Recent increase in gas prices has sent a widespread shock wave to the trade & industry in all major trade and industrial areas of the country, describing it what they called as unjustified and irrational decision on the part of the government.

In the backdrop of unusual rise in oil prices, the comparatively low cost natural gas has assumed a key position in the fuel regime of the country which was being considered as a plus point of the national economy for keeping the cost of production low.

Major industrial and trade circles of Karachi, Lahore, Sialkot, Gujranwala and Faisalabad have lodged a strong protest over the increase in gas prices.

Ameen Bandukda, Chairman, SITE Association of Industry has expressed strong resentment on what he called unilateral decision of the government for increasing gas prices by 15.5 per cent for all consumer categories throughout the country with effect from 1st January 2006.

Though the industry had presented strong and convincing arguments at the public hearing held by OGRA on December 29th, yet OGRA seems to have paid no heed to the reasoning.

SITE Chairman was surprised to note that the original petition filed by Sui Southern Gas Company Ltd was for an increase of 13.04 % but the government actually allowed an increase of 15.5% across the board, which is more than what was demanded by the gas producer. He said that this was for the first time in the history of Pakistan that a utility supplier has been allowed to increase prices more than what they had actually petitioned for.

The manufacturing companies, especially in Karachi, are beset by a number of infrastructural problems and rising costs. The government has time and again realized the need for reducing the cost of doing business and providing an enabling environment, but are not following this in letter and spirit.

Bandukda said that the ever-increasing prices of gas have rendered particularly the products of value-added industries un-viable in the domestic and international markets. If the price of gas is not capped the export oriented and value-added industries would be constrained to close down, he added.

He urged President Gen. Pervez Musharraf, Prime Minister Shaukat Aziz, Mr. Amanullah Khan Jadoon, Federal Minister for Petroleum & Natural Recourses to direct the authorities concerned to review their decision and bring the gas prices down. He said that gas is an indigenous resource and in abundance. Thus, there is no justification in continuously scaling its prices upward.

Besides Karachi, all the leading industrial sectors in rest of the country have vehemently condemned what they remarked sharp increase in the gas prices. Gas is a local raw material so the government has no justification to take the prices up.

Meanwhile, an emergent meeting of the standing committees was convened on the issue by the Lahore Chamber of Commerce and Industry. It was chaired by LCCI President Mian Shafqat Ali and also addressed by LCCI Senior Vice President Abdul Basit and Vice President Aftab Ahmad Vohra.

The standing committees, including Textile, Steel, Pharmaceutical, Plastic, Auto Parts, Cottage Industry, Energy, Engineering, Home Appliances, Leather, Mining and Minerals, Paper, Paint, Sugar, Agriculture, Pesticides, Agro and Food Processing and Chemical and Dyes, are unanimous that there is a number of sectors where gas is the major raw material and increase in the tariff would hit them badly.

The government should ensure the participation of stake-holders in all such decision-making bodies which have a direct relation with the common people.

The industrialists were of the view that electricity had already become very expensive making it almost impossible for the industrialists to remain competitive in the international market. They switched over to gas to keep the wheels of their industrial sector running as well as meeting the price and quality demand of the international buyers, but this time again increase in gas prices would kick Pakistani industry out of competition in the international market. How come Pakistan could meet the export target of US 20 billion dollars with expensive basic inputs, they questioned.

LCCI President Mian Shafqat Ali, Senior Vice President Abdul Basit and Vice President Aftab Ahmad Vohra said that the hike in gas prices has diluted the relief given to different industrial sectors in shape of 15% sales tax waiver. From 1999 to 2005 the gas prices were raised 109 per cent and only in the year 2005 the rates were increased 31 per cent, which is a sheer injustice with the industry. Like fertilizer sector, the government should exempt the whole industry from this hike.

The recent hike would take the export prices of Pakistani goods to 6 to 7 percent up leaving Pakistani goods incompetitive in the global market.

The question is if there is a shortage of gas in the country then why do the authorities not importing it from Iran and Central Asian States where the prices are almost half.

The raise in gas tariff would destroy the major industrial sectors particularly at a time when the country has the competitors like China and India.

On the one hand the government was striving for industrial growth while on the other it was making such unwise decisions, which would cast negative impact on the overall economy. The step would definitely increase the production cost and it would ultimately affect the common man.

The industry of the country would not be able to bear the loss of billions of rupees caused by this hike in the prices of gas, which is a raw material for several industrial sectors.

A delegation of traders and industrialists is being constituted for a meeting with Prime Minister Shaukat Aziz to get the gas tariff-hike withdrawn.