KARACHI: While urging the government to immediately implement a nine-cent per kWh power tariff, the business leaders have warned that high gas prices will bring the industries on the verge of collapse due to rising cost of production amid surging inflation.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Acting President Saquib Fayyaz Magoon told a press conference on Wednesday at the Federation House that the exports are becoming uncompetitive on the world market due to unprecedented gas and power tariffs.

He said industries were paying 17 cents per kWh whereas our regional competitors were getting electricity at half of that price.

The power purchase price has increased by 95.82pc since July 2018 which is mainly due to the higher capacity component in the power tariff. Last year, the industry witnessed a 10pc reduction in power generation which resulted in a higher per unit capacity component, he said.

Asks govt to notify 9-cent power tariff and reverse gas price hike

The acting FPCCI chief said that estimates indicate that for FY24, industrial consumers face a cross-subsidy burden of Rs244 billion. Cross subsidisation must end to protect trade and industry as it is unfair and makes no economic sense, he added.

On gas sector woes, Mr Magoon reiterated that earlier this month, the federal cabinet approved a significant increase in gas prices, raising them by up to 67pc for residential users and by 700pc for fertiliser plants.

He said a hike in gas tariffs for fertiliser plants is expected to significantly contribute to food inflation. On top of that, gas production has experienced a decline from 4,063 mmcfd in 2012 to 3,505 mmcfd in 2022.

Power transmission

All Pakistan Textile Mills Association (Aptma) Chairman Asif Inam said the country has 47,000 megawatts installed generation capacity but the transmission and distribution capacity is only 28,000MW.

“Independent power producers (IPPs) on a take-or-pay basis are causing enormous financial burden on domestic, commercial and industrial consumers.

Another 17,000MW generation capacity is in the pipeline and on the other hand, the electricity consumption in the industrial sector has declined by 25pc due to unaffordable power tariffs. “Where are we going to use this excessive capacity at a time when industrial production is no longer feasible,” he questioned.

Hyderabad Chamber of Commerce and Industry (HCCI) President Adeel Siddiqui pointed out that “we have a 55,000MW wind power corridor waiting to be tapped.” He strongly denounced fuel adjustment charges for being a tool to further squeeze the regularly paying consumers of electricity. He claimed that the 80pc bangles industry had shut down as they could no longer afford electricity.

Published in Dawn, February 22nd, 2024