KARACHI: The business community on Friday slammed the government’s move of increasing the petrol and diesel prices by a whopping Rs60 a litre in less than a week and the sudden Rs7.9 per unit hike in electricity base tariff will not only push up the cost of production but will also jolt the cost of doing business and ease of doing business indices.

The dual blow to the general public and the industries in the shape of a massive hike in power and petroleum prices would fuel food inflation besides rendering the country’s exports uncompetitive on the world market.

The National Electric Power Regulatory Authority (Nepra) on Thursday increased the base tariff to Rs24.82 per unit effective July 1 from Rs16.91 while the finance minister the same day raised the petrol and diesel rates by another Rs30 to Rs209.86 and Rs204.15.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Acting President Suleman Chawla said the cumulative effect of the fuel and power rates increase may unleash a historical economic stagnation which would result in a lot of bankruptcies, inevitable defaults on account of electricity bills, leaving many export orders unfulfilled besides causing huge loss of employment opportunities and tax revenue.

Say inflation spike to multiply woes of hard-pressed masses

Inflation, which had already climbed to 13.8pc would cross 20pc in a short span of four to eight weeks, he feared.

Mr Chawla said the higher power and petroleum prices would affect the masses badly. The government should come up with a protective mechanism for SMEs in consultation with the apex chamber as small and medium enterprises are the real engine of growth and employment generation.

Karachi Wholesalers Grocers Association Patron-in-chief Anis Majeed told Dawn that he expected that the prices of essential food items may further rise by another Rs3-4 a kg after the fresh hike in fuel and electricity rates.

Earlier, the prices had risen by Rs2-3 a kg when Mr Miftah had raised the petrol and diesel prices by Rs30 a litre on May 27.

He said many items like pulses are vulnerable to international rates, high freight charges and uncertain exchange rate parity. The government should have evolved a mechanism to provide relief to the already hard-pressed masses, he observed.

President Korangi Association of Trade and Industry (KATI) Salman Aslam said the government dropped petrol and electricity bombs on the people week, which would increase the production cost to a dangerous level.

He said the government was failing to provide relief to the masses rather its decisions have multiplied the problems of the public contrary to the promises it had made before coming to the power.

Foreign exchange reserves had also reached a three-year low while the government is yet to formulate a clear policy that could avert the economic difficulties of the poor masses.

Economic instability has put the investment at risk and it has become impossible to run industries with the highest-ever cost of production, he warned.

KATI chief feared a sharp increase in the unemployment rate and the government should take immediate decisions, in consultation with stakeholders, for the provision of relief to the low-income group, besides ensuring investment protection through bailout packages for industries.

President Site Association of Industry, Abdul Rashid urged the government to take back two unpopular decisions in the best interest of consumers as well as trade and industry. Otherwise, the dream of the development of the country’s economy would never come true.

He said the business community would not accept the self-imposed decision of Nepra as raising the base electricity tariff without a public hearing is a total violation of laws.

He urged the government to refrain from taking such harsh decisions that put the survival of industries at stake.

He said the government should take steps like cutting petroleum prices, and power and gas tariffs to bring down the cost of doing business to promote exports.

Mr Rashid demanded Prime Minister Shehbaz Sharif issue a notification to abolish the 17pc sales tax on solar energy as per his promise, also explain the HS code for importing raw materials while the 30pc duty on the import of machinery should be abolished immediately so that the production activities can be promoted without any hindrance.

Pakistan Yarn Merchants Association Chairman Saqib Naseem termed the sharp rise in energy prices as catastrophic for business and industry. He urged the PM to reduce utility charges so that trade and industrial activities can be continued without any delay.

Published in Dawn, June 4th, 2022