Experts say gas price hike may have disastrous impact on politics, economy

In this file photo, Pakistani cooks work to prepare Iftar outside a shop in Rawalpindi on Oct. 29, 2003. (AFP)
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Updated 24 January 2020

Experts say gas price hike may have disastrous impact on politics, economy

  • OGRA has recommended up to 214 percent hike in gas tariffs for tier-1 majority consumers
  • Pakistan seeks to increase the revenue of SNGPL and SSGC to Rs534.1 billion by introducing new rates

KARACHI: While the government remains indecisive on the new gas rates suggested by the petroleum division, experts warn the proposed tariff increases will be detrimental to the financial interests of ordinary consumers and may have disastrous political and economic consequences.
The Oil and Gas Regulatory Authority (OGRA) has sought the government’s approval to increase the revenue of utility companies, the Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC), from Rs500.3 billion to Rs534.1 billion.
If approved, the gas prices will go up by 192 percent and 214 percent for the domestic consumers of the SNGPL and SSGC, respectively. These domestic consumers also constitute the biggest chunk of gas users in the country.
The approval will also affect the special commercial users of the SNGPL and SSGC who will pay 221 percent and 245 percent more, respectively.
Any change in gas tariffs will come into effect from February 2020.
While the Economic Coordination Committee of the Cabinet has not decided to raise the gas tariffs so far, the government has been warned against the move since the underprivileged sections of the society are already hit by high inflation.
“The increase in the gas tariff at this stage will be disastrous when the cost of doing business is already unbearable,” Dr. Shahid Hassan Siddiqui, senior economist, commented on Thursday. “The inflation is hovering at about 13 percent as the government has already made multiple upward revisions in the cost of electricity, gas and other inputs.”
“The industries are in a critical condition,” concurred Zubair Motiwala, chairman of the Council of All Pakistan Textile Associations, while talking to Arab News. “They are suffering due to increased cost of doing business. How can industries operate if input costs are jacked up every now and then? The government should not raise gas rates.”




In this file photo, a worker carries a cylinder of Liquified Petroleum Gas (LPG) at a gas distribution centre in Peshawar on April 29, 2015. (REUTERS)

The rate of inflation increased by 12.6 percent in December 2019 as compared to an increase of 12.7 percent in the previous month and 5.4 percent in December 2018. The government, more recently, is striving to control the supply and prices of wheat flour and sugar.
“It is very difficult for us to run the business. I have not seen such a situation in my 65 years of life,” Fazal Kareem Abbasi, President of General Naanbai Association, told Arab News. “If the government raises gas rates, we will instantly increase the price of bread by Rs3,” he warned.
Some economists blame the $6 billion International Monetary Fund (IMF) program for higher inflation and slowing economic growth in Pakistan. The country had availed the program in July last year.
“I warned against going to the IMF since it was clear that it would ask the government to increase the prices of utilities etc. The income of the people has also declined. The current situation may lead to lawlessness and economic instability,” Dr. Shahida Wizarat, senior economist, told Arab News.
As the final decision on the matter rests with the federal cabinet, analysts believe the government may not approve such a significant jump in gas prices in its present form, though they warn it may become inevitable in the long run.


Pakistan discussing expansion of CPEC to Taliban-led Afghanistan — envoy to Kabul

Updated 27 September 2021

Pakistan discussing expansion of CPEC to Taliban-led Afghanistan — envoy to Kabul

  • Says discussions held with the Taliban administration on CPEC and other ways to develop Afghan economy
  • In recent days representatives from Pakistan, China and Russia have held meetings with Taliban officials

ISLAMABAD: Pakistan has discussed Taliban-led Afghanistan joining the multibillion-dollar China-Pakistan Economic Corridor (CPEC) infrastructure project, the Pakistani ambassador to the country said on Monday.
CPEC is a central part of the Belt and Road Initiative, under which Beijing has pledged over $60 billion for infrastructure projects in Pakistan, much of it in the form of loans.
“Regional connectivity is an important element of our discussion with Afghan leadership and our way forward for our economic interaction with Afghanistan,” said Mansoor Ahmad Khan, Pakistan’s envoy to Kabul, in an interview with Reuters.
“This important project — China Pakistan Economic Corridor ... provides good opportunities, good potential for providing infrastructure and energy connectivity between Afghanistan and Pakistan ... (and) also connecting South Asia to the Central Asian region.”
Khan said that discussions had been held with the Taliban-led administration on this and other ways to develop the country’s economy.
“I think there has been deep interest in terms of developing economic connectivity of Afghanistan with Pakistan through CPEC and with other neighboring countries including Iran, China, Central Asian countries.”
In recent days representatives from Pakistan, China and Russia have held meetings with Taliban officials. Khan said security and economic development were the two main topics under discussion and that these countries expected to continue to consult as a group and meet with the Taliban going forward.

Since the Taliban took over Afghanistan on August 15, the country has been plunged into economic crisis as the nation’s international assistance has been largely cut off. Billions of dollars in central bank assets held abroad have also been frozen, which has put pressure on the banking system and prevented most transactions involving US dollars, which Khan said was also hampering trade.
Khan said that Pakistan was also trying to work with the international community to ease international restrictions on the banking system and several executives from Pakistani financial institutions with a presence in Afghanistan had visited Kabul in recent days to see if the situation could be improved should international limits end.
The United States and other Western nations are reluctant to provide the Taliban with funds until the militant movement provides assurances that it will uphold human rights, and in particular the rights of women.
Pakistan, which shares a border with Afghanistan and hosts millions of Afghan refugees from decades of conflict, is concerned about the economic crisis hitting its neighbor. Its prime minister, Imran Khan, and other officials have urged the international community not to isolate the Taliban administration, saying aid should be provided to prevent economic collapse and a wave of refugees.
Pakistan has had deep ties with the Taliban and has been accused of supporting the group as it battled the US-backed government in Kabul for 20 years — charges denied by Islamabad.
However, Pakistan has not yet formally recognized the Taliban-led administration and Khan, the Pakistani ambassador, told Reuters that “the issues of formal recognition will come later as Pakistan is part of the international community.”


State Dept No. 2 to visit Pakistan, India after Taliban takeover

Updated 27 September 2021

State Dept No. 2 to visit Pakistan, India after Taliban takeover

  • Wendy Sherman, after CIA chief Bill Burns, will be one of the first high-level officials under President Biden to visit Pakistan
  • Sherman will meet senior officials in Islamabad on October 7-8 after visit to New Delhi and Mumbai on October 6-7

WASHINGTON: US Deputy Secretary of State Wendy Sherman will travel next month to Pakistan and India, bitter rivals that have clashed on the way forward in Afghanistan, the State Department announced Monday.
Sherman, after CIA chief Bill Burns, will be one of the first high-level officials under President Joe Biden to visit Pakistan, which has long irritated the United States over its relationship with the Taliban.
Sherman will meet senior officials in Islamabad on October 7-8 after an earlier visit to New Delhi and Mumbai on October 6-7, when she will meet officials and civil society leaders and address the US-India Business council’s annual “ideas summit,” the State Department said.
The trip comes as India, one of the top allies of the Western-backed Afghan government that collapsed last month, urges the world to pay closer attention to Pakistan’s role in the turmoil .
Pakistan was the primary backer of the 1996-2001 Taliban regime, and has been accused by US officials of keeping the insurgents alive through covert support. Islamabad vehemently denies the charge.
Pakistani Prime Minister Imran Khan, in an opinion piece published Monday in The Washington Post, called his country a “convenient scapegoat.”
“In Afghanistan, the lack of legitimacy for an outsider’s protracted war was compounded by a corrupt and inept Afghan government, seen as a puppet regime without credibility, especially by rural Afghans,” he wrote, elaborating on themes in his address Friday to the UN General Assembly.
He urged the world to engage the Taliban government “to ensure peace and stability.”
Biden, who like his predecessors has called for strong relations with India, has yet to speak to Khan, although Secretary of State Antony Blinken met his Pakistani counterpart on the sidelines of UN meetings last week and thanked Islamabad for help in evacuating Americans from Afghanistan.


No one from Afghanistan will address world leaders at UN

Updated 27 September 2021

No one from Afghanistan will address world leaders at UN

  • Ambassador for the government ousted by the Taliban, who was due to speak on Monday, withdraws his name
  • Move comes amid competing claims for Afghanistan’s UN seat in New York after Taliban seized power last month

UNITED NATIONS: No representative from Afghanistan will address the annual high-level UN General Assembly in New York after the ambassador for the government ousted by the Taliban — who was due to speak on Monday — withdrew his name.
The move comes amid competing claims for Afghanistan’s UN seat in New York after the Taliban seized power last month.
Taliban Foreign Minister Amir Khan Muttaqi last week asked to address the gathering of world leaders at the United Nations and nominated the Islamist group’s Doha-based spokesman Suhail Shaheen as Afghanistan’s UN ambassador.
Ghulam Isaczai is the current UN ambassador, who represents Afghanistan’s government ousted by the Taliban, and has also asked to renew his accreditation. He was scheduled to address the final day of the high-level UN gathering on Monday, but withdrew late on Sunday, diplomats said.
Isaczai did not immediately respond to a request for comment.
Rival claims have also been made for Myanmar’s UN seat after a military coup in February ousted the elected government. No representative from Myanmar will address the high-level General Assembly meeting.
UN accreditation issues are dealt with by a nine-member committee, whose members include the United States, China and Russia. It traditionally meets in October or November.
Until a decision is made by the credentials committee on both Afghanistan and Myanmar, Isaczai and Myanmar’s UN envoy representing the ousted government, Kyaw Moe Tun, will remain in the seats, according to the General Assembly rules.


Pakistani PM breaks ground to revive Karachi Circular Railway

Updated 27 September 2021

Pakistani PM breaks ground to revive Karachi Circular Railway

  • KCR, worth Rs20.7 billion, will have 16 stations and 24 level crossings
  • KCR was main mode of transportation in 70s and 80s but had to be shut down in 1999

KARACHI: Pakistani Prime Minister Imran Khan on Monday performed the groundbreaking to revive the Karachi Circular Railway (KCR), which is aimed at easing commutes in Karachi, a metropolis of 15 million people that is known for its lack of transport facilities. 
The KCR, worth Rs20.7 billion, will have 16 stations and 24 level crossings, connecting major neighborhoods of the city through trains along a 29-kilometer track. The project was partially launched last year. 
Karachi ranks as having the worst public transport system globally, according to a 2019 study by car-parts company Mister Auto that looked at 100 major cities. It serves about 42 percent of Karachi’s commuters, relying on decades-old, overcrowded buses that use the roof as a second deck for passengers at times. This despite the city being home to Pakistan’s main ports and the regional headquarters for companies such as Standard Chartered Plc and Unilever Plc, helping it generate half of the nation’s tax revenue.
Khan said Karachi as the nation’s financial heart could attract investment from across the world, but the provision of basic infrastructure like public transport was a prerequisite, saying the KCR project would “shift the burden from Karachi’s roads.” 
“Despite political differences, we will have to move along for the sake of country and Sindh. All this is inter-linked,” he said, referring to ongoing political squabbles between his ruling PTI party and the Pakistan People’s Party which rules Sindh province of which Karachi is the capital.
“Some things the federal government cannot do alone, while others Sindh government cannot do solely without support from the federal government,” Khan added. 

Pakistan's Prime Minister Imran Khan addresses the groundbreaking ceremony of Karachi Circular Railway (KCR) infrastructure project in Karachi, Pakistan, on September 27, 2021. (Photo courtesy: PID)

Commissioned in 1964, the KCR was originally designed to help the employees of Pakistan Railways travel between their workplaces and residences in Karachi’s eastern neighborhoods.
The service later turned into a full circle of 44 kilometers in 1970 and connected Karachi’s four main work areas — the port, the Sindh Industrial Trading Estate, the city’s central commercial areas such as Saddar, and the Landhi Industrial Area.
It remained the means of transportation till 1984 when the number of trains was reduced, but a lack of maintenance and repair and a growing gap between expenditure and revenue led to the service being shut down in 1999.
In March 2020, the Supreme Court ordered authorities to revive the rail transit project.
Earlier on Monday, Railways Minister Azam Khan Swati said in a statement that the KCR project would be completed in three years at a cost of Rs20.7 billion. 


Pakistani rupee hits new all-time low against dollar

Updated 27 September 2021

Pakistani rupee hits new all-time low against dollar

  • Greenback closes at historic high of Rs169.6
  • Rupee has cumulatively lost 11.38 percent since May 14

KARACHI: The Pakistani rupee broke a stability streak and lost 51 paisas to hit an all-time low against the dollar in the interbank market on Monday.
The greenback reached a historic high of Rs169.6 at the close of Monday’s trading session, according to the State Bank of Pakistan’s data. It stood at 169.08 at the end of last week. 
The last time the Pakistani currency touched a record low was on September 15, dropping to Rs169.12 against the dollar. 
With the fresh fall of 0.31 percent, the rupee has cumulatively lost 11.38 percent (Rs17.33) of its value since May 14, when the US dollar was as low as Rs152.27. 
Pakistan’s currency traders and analysts blame a rising import bill and the Afghanistan situation among other factors for the ongoing depreciation of the national currency. 
“Due to higher commodity prices, supply chain bottlenecks and uncertain situation in Afghanistan, demand for US dollar is higher than supply,” Samiullah Tariq, the Pakistan-Kuwait Investment Company’s head of research, told Geo.tv news website. 
The country’s central bank has also stayed away from the currency market, saying it wants to adhere to a market-based exchange rate policy. Previously, the SBP used to sell dollars in the market to stabilize the currency. 
As the central bank was following a flexible exchange rate, the exchange rate parity was going in favor of the US currency due to higher demand, Tariq added.