Industries in Pakistan’s Karachi suffering $125mln daily losses amid gas crisis — traders

An employee works on a loom at a fabric factory in Karachi, Pakistan, on November 23, 2021. (AFP/File)
Short Url
Updated 31 January 2022
Follow

Industries in Pakistan’s Karachi suffering $125mln daily losses amid gas crisis — traders

  • Pakistan is currently facing around 200 mmcfd gas shortage due to depleting gas reserves, cargo defaults
  • Court stay barred government from implementing load management plan for domestic consumers, official says

KARACHI: Business leaders on Monday said they were “disappointed” over the suspension of gas supply to industries in the southern Pakistani commercial and industrial hub of Karachi for more than three months, which they said was causing Rs22 billion ($125 million) per day losses in export revenue. 
Representatives of 14 industrialist bodies, including Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Idrees and Businessmen Group Chairman Zubair Motiwala, appealed to Prime Minister Imran Khan and his aides to immediately restore gas supply to all industrial zones in Karachi. 
“Our industrial activities are suspended for last 68 days and the situation is affecting thousands of laborers,” Motiwala said at a joint press conference in Karachi. “On account of exports, industries are suffering Rs22 billion losses on a daily basis.” 




Zubair Motiwala, chairman of Businessmen Group, addresses a joint press conference in Karachi, Pakistan on January 30, 2022. (Photo courtesy KCCI)

They said they were “deeply shocked and totally disappointed with the government for neglecting and ignoring repeated appeals over natural and regasified liquefied natural gas (RLNG) crises and for remaining indecisive in resolving the matter after more than 100 days.” 
The chronic gas shortage amid depleting local reserves worsens Pakistan’s energy woes in winters and leaves industrial and domestic consumers struggling for survival. This year the situation was further complicated when prices of liquefied natural gas (LNG) skyrocketed globally, making it unaffordable for the South Asian nation to import it. 
More recently, suppliers denied two LNG cargoes as they backed out from deliveries amid skyrocketing rates and increasing global demand. 
“The country is currently facing around 200 million cubic feet per day (mmcfd) gas shortage due to cargo defaults and about 9 percent yearly depletion of gas from indigenous fields,” Muzzamil Aslam, a spokesperson for the Pakistani energy ministry told Arab News. 
“Despite global crunch, high demand and prices, Pakistan was able to import 90 percent of the LNG cargoes.” 
The Karachi-based industrialists said the government’s promises to supply gas to export industries appeared to be an eyewash and a mere lip-service. 
“It is extremely unfair to deprive Karachi of gas or RLNG as the city, being the textile and industrial hub of Pakistan, alone contributes 68 percent revenue to the national exchequer, 54 percent to national exports and 52 percent to textile exports,” Motiwala said. 
“Karachi continues to face discrimination that has led to causing severe production losses of more than 66 percent due to reduced or no supply of gas.” 
Jawed Bilwani, chairman of Pakistan Apparel Forum, said the value-added textile export industries were beset by such behavior of the government. 
“Government is well aware that a decline in exports will translate into downward revision of national revenue and negatively impact the foreign exchange coming into Pakistan,” Bilwani said. 
“Industrialists have invested more than $3 billion on the purchase of machineries and equipment, which was likely to promote industrialization but this policy will be wasted due to unavailability and unjustified distribution of gas.” 
Industrial consumers alone have not been bearing the brunt of Pakistan’s gas shortages, but domestic consumers also face frequent gas outages and are compelled to look for alternative sources, mainly the liquefied petroleum gas (LPG). 
“We are suffering from gas outages on a daily basis,” Kashif Hussain, a resident of Karachi’s Nazimabad area, told Arab News. “The supply is restored during night times with extremely low pressure causing severe problems in cooking food.” 
Similar situation is being witnessed in other parts of the country, including the eastern city of Lahore. “The situation of gas supply is not normal. In some areas, supply resumes at night but with low pressure,” Asif Ali Khan, a Lahore resident, said. 
Since the shortfall hit the country, LPG prices have gone up by 52 percent, according to the official weekly inflation data. 
Responding to a question about gas supply situation in Sindh, Aslam said industrialists had obtained a stay from the court, due to which the load management plan could not be implemented to divert gas to domestic consumers. 
“Every year gas to non-exporting industries is disconnected and diverted to domestic consumers, but due to the court’s stay order obtained by some industrialists, the government is unable to divert gas to domestic consumers as per the load management plan,” the energy ministry spokesperson said. “That is why domestic consumers are facing problems.” 
Aslam, however, said the situation would improve in the first week of February. 


IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan

Updated 4 sec ago
Follow

IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan

  • Pakistan rebuilt reserves, cut its deficit and slowed inflation sharply over the past one year
  • Fund says climate shocks, energy debt, stalled reforms threaten stability despite recent gains

ISLAMABAD: Pakistan’s economic recovery remains fragile despite a year of painful stabilization measures that helped pull the country back from the brink of default, the International Monetary Fund (IMF) warned on Thursday, after it approved a fresh $1.2 billion disbursement under its ongoing loan program.

The approval covers the second review of Pakistan’s Extended Fund Facility (EFF) and the first review of its climate-focused Resilience and Sustainability Facility (RSF), bringing total disbursements since last year to about $3.3 billion.

Pakistan entered the IMF program in September 2024 after years of weak revenues, soaring fiscal deficits, import controls, currency depletion and repeated climate shocks left the economy close to external default. A smaller stopgap arrangement earlier that year helped avert immediate default, but the current 37-month program was designed to restore macroeconomic stability through strict monetary tightening, currency adjustments, subsidy rationalization and aggressive revenue measures.

The IMF’s new review shows that Pakistan has delivered significant gains since then. Growth recovered to 3 percent last year after shrinking the year before. Inflation fell from over 23 percent to low single digits before rising again after this year’s floods. The current account posted its first surplus in 14 years, helped by stronger remittances and a sharp reduction in imports. And the government delivered a primary budget surplus of 1.3 percent of GDP, a key program requirement. Foreign exchange reserves, which had dropped dangerously low in 2023, rose from US$9.4 billion to US$14.5 billion by June.

“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF Deputy Managing Director Nigel Clarke said in a statement after the Board meeting.

But he warned that Islamabad must “maintain prudent policies” and accelerate reforms needed for private-sector-led and sustainable growth.

The Fund noted that the 2025 monsoon floods, affecting nearly seven million people, damaging housing, livestock and key crops, and displacing more than four million, have set back the recovery. The IMF now expects GDP growth in FY26 to be slightly lower and forecasts inflation to rise to 8–10 percent in the coming months as food prices adjust.

The review warns Pakistan against relaxing monetary or fiscal discipline prematurely. It urges the State Bank to keep policy “appropriately tight,” allow exchange-rate flexibility and improve communication. Islamabad must also continue raising revenues, broadening the tax base and protecting social spending, the Fund said.

Despite the progress, Pakistan’s structural weaknesses remain severe.

Power-sector circular debt stands at about $5.7 billion, and gas-sector arrears have climbed to $11.3 billion despite tariff adjustments. Reform of state-owned enterprises has slowed, including delays in privatizing loss-making electricity distributors and Pakistan International Airlines. Key governance and anti-corruption reforms have also been pushed back.

The IMF welcomed Pakistan’s expansion of its flagship Benazir Income Support Program, which raises cash transfers for low-income families and expands coverage, saying social protection is essential as climate shocks intensify. But it warned that high public debt, about 72 percent of GDP, thin external buffers and climate exposure leave the country vulnerable if reform momentum weakens.

The Fund said Pakistan’s challenge now is to convert short-term stabilization into sustained recovery after years of economic volatility, with its ability to maintain discipline, rather than the size of external financing alone, determining the durability of its gains.