KARACHI: Pakistani industrialists in the country’s commercial hub of Karachi warned on Tuesday they would observe a “no export day” up to three times a week from next month to protest a hike in gas prices, saying it posed a “threat to the survival” of their businesses and could lead to the collapse of the industrial sector.
On Oct. 31, Pakistan announced a sharp increase in the price of natural gas for most households and industry ahead of the cash-strapped country’s first review of a $3 billion International Monetary Fund (IMF) bailout.
Addressing a press conference, officials from the Karachi Chamber of Commerce and Industry (KCCI) along with representatives from the Industrial Town and Value-Added Textile Associations said gas tariffs for industry had increased to about Rs2,600 per Metric Million British Thermal Unit (MMBtu), appealing to the government to bring it down to Rs1,350 per MMBtu, determined as the 100 percent cost of gas by the regulator.
“If the government fails to pay attention to the business community’s demand, we will intensify our protests by displaying protest banners all over the city and observe a ‘no export day’ twice and even thrice a week,” Jawed Bilwani, vice chairman of the ruling Businessmen Group (BMG) at KCCI, warned, saying the new tariffs were a way to “terribly penalize the industrial sector of the country.”
KCCI President Iftikhar Ahmed Sheikh said the government needed to find ways to increase its gas supplies, instead of re-prioritizing existing gas supplies, switching from one set of consumers to the other and raising the tariffs “to completely unabsorbable and unbearable level, which was purely against the spirit of Pakistan’s constitution.”
Sheikh said the gas tariff hike would lead to the closure of industries, trigger lay-offs and cause a huge retrenchment of the labor force which “might result in serious law and order situation, steep rise in street crimes and bankruptcy of manufacturing units.”
Last month, while announcing the hike in gas tariffs, Energy Minister Muhammad Ali said the tariff increase would generate nearly 400 billion rupees ($1.42 billion), adding that the state-run gas sector would from now on face no losses.
Energy sector debt has been the main issue that the IMF has highlighted in tackling the fiscal deficit and it has been recommending measures to deal with it.
Pakistani industries threaten ‘no export’ days thrice a week against sharp hike in gas prices
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Pakistani industries threaten ‘no export’ days thrice a week against sharp hike in gas prices
- On Oct. 31, Pakistan announced hike in natural gas prices for most households and industry ahead of IMF review
- Industry leaders say gas tariffs for industry increased to about Rs2,600 per MMBtu, call for Rs1,350 per MMBtu
Rating firm S&P says it won’t rush Iran war downgrades, sees risks for countries like Pakistan
- Agency says it is monitoring indebted energy importers as higher oil prices strain finances
- Gulf economies seen better placed to weather shock, though Bahrain flagged as vulnerable
LONDON: S&P Global said it would not make any knee-jerk sovereign rating cuts following the outbreak of war in the Middle East, but warned on Thursday that soaring oil and gas prices were putting a number of already cash-strapped countries at risk.
The firm’s top analysts said in a webinar that the conflict, which has involved US and Israeli strikes against Iran and Iranian strikes against Israel, US bases and Gulf states, was now moving from a low- to moderate-risk scenario.
Most Gulf countries had enough fiscal buffers, however, to weather the crisis for a while, with more lowly rated Bahrain the only clear exception.
Qatar’s banking sector could also struggle if there were significant deposit outflows in reaction to the conflict, although there was no evidence of such strains at the moment, they said.
“We don’t want to jump the gun and just say things are bad,” S&P’s head global sovereign analyst, Roberto Sifon-Arevalo, said.
The longer the crisis was prolonged, though, “the more difficult it is going to be,” he added.
Sifon-Arevalo said Asia was the second-most exposed region, due to many of its countries being significant Gulf oil and gas importers.
India, Thailand and Indonesia have relatively lower reserves of oil, while the region also had already heavily indebted countries such as Pakistan, Bangladesh and Sri Lanka whose finances would be further hurt by rising energy prices.
“We are closely monitoring these (countries) to see how the credit stories evolve,” Sifon-Arevalo said.
