KARACHI: Honda Atlas Cars Pakistan Ltd has announced the longest plant shutdown to date in the current economic crisis amongst the country's automakers, which are struggling to obtain raw materials due to import difficulties.
The company, a unit of Japanese car giant Honda Motor Co Ltd , said its plant would shut from March 9, 2023, to March 31, 2023.
“The company is not in a position to continue with its production,” it said in a notice to the Pakistan Stock Exchange (PSX), explaining its supply chain had been "severely disrupted."
Other listed-automakers, such as Indus Motor Company Limited (INDU) and Pak Suzuki Motor Company (PSMC), have also been forced to halt production during the past three quarters due to Pakistan's economic difficulties, which have seen central bank foreign exchange reserves drop to a level barely able to cover four weeks of imports.
As a result, letters of credit (LC), used for imports, are facing delays while being processed and priority is being given to essential items such as food and medicine.
Pakistan is currently in talks with the International Monetary Fund (IMF) to unlock the next tranche of $1.1 billion of a $6.5 billion bailout agreed in 2019.
“It is worrying because shutdowns not just impact corporate profitability but unemployment as well. The longer these shutdowns continue, it would test the companies' ability to maintain staff strength," says Fahad Rauf, head of research at Ismail Iqbal Securities, a local brokerage firm.
Rauf adds that the situation is not likely to improve any time soon for low priority sectors, such as automobiles, in light of LC constraints.
“Pakistan has limited dollars and until reserves improve to at least two months’ worth of import cover, import restrictions would likely continue.”
Other manufacturing halts in the sector have been between two and 16 days.
Pakistan's Honda Atlas shuts production to end-March on import difficulties
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Pakistan's Honda Atlas shuts production to end-March on import difficulties
- Other listed-automakers, such as Indus Motor Company Limited and Pak Suzuki Motor Company, have also been forced to halt production
- Pakistan's economic difficulties have seen central bank foreign exchange reserves drop to a level barely able to cover four weeks of imports
Pakistan PM orders action against fuel hoarding amid Iran conflict supply fears
- Sharif asks authorities to shut down petrol pumps involved in any attempt to create artificial shortages
- Government says it holds adequate fuel stocks despite shipping risks as Strait of Hormuz tensions rise
ISLAMABAD: Prime Minister Shehbaz Sharif on Friday ordered authorities to take strict action against fuel hoarders and shut down petrol pumps involved in any attempt to create artificial shortages, as anxiety grows over potential supply disruptions from the widening conflict involving Iran.
Sharif issued the directive during a high-level meeting on petroleum supplies, where officials briefed him that Pakistan currently holds sufficient fuel reserves to meet domestic demand despite the volatile regional situation.
The move comes as Pakistan steps up contingency measures following fears of supply disruptions linked to the escalating conflict involving Iran, the United States and Israel.
The concerns stem partly from disruptions in tanker traffic after the Strait of Hormuz — a key global oil chokepoint between Iran and Oman through which much of Pakistan’s imported crude typically transits — was shut following rising hostilities in the Gulf.
“The prime minister directed provincial governments to take strict legal action against hoarders of petroleum products,” Sharif’s office said in a statement after the meeting.
“Any petrol pump involved in the reprehensible practice of creating artificial shortages should be immediately shut down, its license revoked and legal action initiated,” it added.
Earlier this week, Pakistan’s Oil and Gas Regulatory Authority (OGRA) allowed oil marketing companies to temporarily regulate supplies to retail outlets to discourage hoarding and maintain stability in fuel distribution.
Sharif instructed the petroleum minister to visit provinces and coordinate with their administrations to develop a strategy for conserving petroleum products and ensuring their uninterrupted supply to the public.
The prime minister further ordered the creation of a digital dashboard to monitor the movement of petroleum products and share real-time data with provincial authorities to improve oversight of fuel transportation and distribution.
