KARACHI, July 1: Leaders of industry have reacted sharply on 68 per cent increase in gas tariff for captive power plants in industrial units announced by Minister of Power and Natural Resources Shah Mahmood Qureshi on Monday on behalf of Oil and Gas Regulatory Authority (Ogra).

These industry leaders plan to hold press conferences in Karachi, Lahore, Faisalabad, Sialkot and other production centers on Wednesday to protest against the move.

Top leaders including Tanveer Sheikh, President of Federation of Pakistan Chambers of Commerce and Industry; Iqbal Ibrahim, Chairman of All Pakistan Textile Mills Association; and Mohammad Nisar Sheikhani, Chairman of Site Association of Industry were emotional in their telephonic conversations and statements. They are expected to meet the prime minister on Wednesday evening to convince him for the withdrawal of this decision.

“I invite you to attend the last rituals for disposing of the corpse of Pakistan’s industry on Wednesday,” Aptma chairman Iqbal Ibrahim said in an emotionally charged voice extending an invitation to attend news conference at Aptma office on Wednesday.

After the federal budget for 2008-09 has disappointed the textile exporters badly as it offered nothing to bring down cost of production or any step to improve export, the abrupt 68 per cent increase in tariff on gas being supplied to industry to the captive power plants is proving virtually last straw on the back of the camel.

The industry now plans to agitate on national level against this steep rise in energy prices in general and more particularly on gas supply to captive power plants. Ironically, Ogra has not pushed up gas prices for private power operators on the plea to keep tariff of electricity within manageable limits but has apparently discriminated against captive power plants in the industry.

“It will increase cost of denim production in my factory by Rs6 a meter,” Ikhtiar Baig, a leader of credit and banking standing committee of the FPCCI said.

According to Zubair Motiwala, a former president of the Karachi Chamber of Commerce and Industry and Site Association of Industry the minimum impact of 68 per cent rise in gas tariff will be 25 per cent on value-added textile sector and about 16 per cent on spinning.

“We are bound to be pushed out of international markets by Bangladesh where the government is offering incentives and concessions in their production and marketing,” Motiwala said.

“A 68 per cent increase in gas price for captive power plants is tantamount to the “murder of industry,” declared FPCCI president Tanveer Shaikh in a statement on Tuesday. He took notice of 31 per cent increase in gas prices and Rs13 per kg rise in compressed natural gas (CNG) and rejected government’s assertion that it was being done to guarantee rate of return to the Sui Southern Gas Company and Sui Northern Gas Pipelines Limited. This logic, he said, was not tenable as these were government-owned companies.

Tanveer Sheikh conceded that international oil prices had risen to unprecedented levels and there was some justification in passing on this impact to the consumers as was done by pushing up prices of petrol, diesel and kerosene but “gas is an indigenous product.’’

The Aptma chief called 68 per cent rise in gas tariff as “devastating” and last nail in textile industry’s coffin, which is already “ailing and gasping for breath”. He feared India, Bangladesh and China will now push out Pakistan from the international market for good and consolidate their foothold.

The government failed to meet electric power demand, which forced the industry to invest heavily on installing captive power plants of about 5 megawatt and now the government had pushed up generation cost to a level where business has become unsustainable, he added.

“Almost every textile project and more particularly those set up in last ten years have a captive power plant,” Ikhtiar Baig said. He estimated that for generation of one megawatt the cost is roughly $800,000 and for a 5 megawatt generator it is about $4 million. There is additional investment for transmission and distribution also. “All investment in billions is now being reduced to scrap,” he said.

Muhammad Nisar Shekhani of Site Association wondered as to why the government was set on a course to make Pakistan a “consumer society” instead of a modern industrial society. The closure of industry from this abnormal high rise in gas supply will lead to further swelling of the unemployed people on our roads and streets, he warned.

Senior business leaders say that they are in touch with the top leadership of the ruling party and are confident of getting this decision reversed.