Jamadi-us-sani 26, 1429

July 1, 2008

unprecedented and exorbitant hike in Gas Tariff

While commenting on the unprecedented and exorbitant hike in Gas Tariff, President, KCCI, Shamim Ahmed Shamsi and Former President, Zubair Motiwala said that “we are simply astonished at this very startling announcement.

At a time when the industry is not doing good and is in doldrums, exports going down, unemployment figures at an all time high, cost of doing business and cost of manufacturing at its peak, this step to increase the Tariff of Gas, which otherwise is indigenous Raw Material and to compare it with World Oil Price is a big mistake on the part of Government of Pakistan.

This hike will definitely increase the price of every commodity in the local market and would put us in a position where it would be impossible to compete in the world market, with special reference to textile. They were of the view that this Sector is the mainstay of our exports, largest engine of employment generation, largest foreign exchange earner.

This is an extra ordinary and un-understandable move by the Government of Pakistan and this is self defeating and contrary to Government of Pakistan’s own policy of supporting the Textile Sector by giving R&D, Zero Rating, Rationalization of Tariff and other steps mainly to reduce the cost of manufacturing and on the other hand, this massive increase which is almost equivalent to three times the support given to this Sector.

They questioned whether this is a sane decision by the democratically elected Government which has come into power to provide more jobs to the population of Pakistan or to snatch the jobs.

They were of the view that this seems to be a conspiracy against the Government and with special reference to the Textile Industry which is hardest hit in this whole scenario because for the Value Added Textile Industry, Gas is the basic Raw Material and in the conversion cost wherein 68% is increased on their Captive Power production and 31% increased on the steam production which is more than 50% of conversion cost and will increase it to almost 25% making it impossible to compete in the Global Market against Regional competitors, specially Bangladesh where Gas prices are 50% less for steam and 70% less for Captive Power compared to previous prices. According to new Tariff this difference has widened to 62% for steam and 83% on Captive Power Plant. Already, our wrong policies have given space to our competitors in the world market and therefore this decision cannot in any way be called wise.

This is certainly the conspiracy hatched by the hidden hands within the Government of Pakistan who do not want Pakistan to prosper and develop.

President, KCCI, Shamim Ahmed Shamsi and Former President, Zubair Motiwala have appealed and cautioned the Prime Minister, Co-Chairman, Asif Ali Zardari, Finance Minister, Commerce / Textile Minister, Ahmed Mukhtar, Shah Mehmood Qureshi, Minister for Petroleum and Natural Resources to immediately withdraw this increase and sit down with the stakeholders to find an alternative to resolve this crucial matter without hurting the Industry/Trade.