KARACHI: Pakistani industrialists in the country’s commercial capital of Karachi switched off their production facilities on Monday to protest about 100 percent rise in gas tariffs, resulting in an estimated $48 million loss to the country’s export earnings.
The government announced a sharp increase in the price of natural gas for most households and industries in October this year to meet a key condition imposed by the International Monetary Fund (IMF) ahead of its first review under a $3 billion bailout program.
Gas tariffs for industry have been raised by about Rs2,600 per metric million British thermal unit (mmbtu), which industry leaders say should be brought down to Rs1,350.
“Nearly 80 to 90 percent industries in Sindh and Balochistan have shut down operations in response to a strike call given to protest the unviable gas tariffs,” Jawed Bilwani, Chief Coordinator of Karachi Industrial Alliance (KIA), told Arab News on Monday.
He said the industrial shutdown in the two provinces was likely to make the country suffer about $48 million losses due to a reduction in exports.
The KIA chief coordinator said the gas tariff hike, ranging from 100 to 130 percent, was driving industries to collapse.
“Some of the industries have been closed while others are on the verge of collapse,” Bilwani said, adding that over 100 percent tariff hike was making Pakistan’s “industrial production unviable and uncompetitive in the international market.”
“The government says this step [to raise gas tariffs] is to curtail circular debt,” he continued. “But neither our industries are responsible for this debt nor they are contributing to it.”
Local industrialists noted the government was charging them to pay subsidies to other sectors. They also pointed out that energy line losses were far higher when it came to domestic consumers than industries.
“Nowhere in the world, export-oriented industries are burdened with cross-subsidy to benefit other sectors,” Bilwani said. “But this is happening in Pakistan.”
Pakistan’s energy woes stem from its fast-depleting local gas reserves at a pace of five to seven percent annually, making the country rely on expensive imported fuel as a result.
Inadequate gas pricing during the tenure of previous governments dented the national exchequer and created a circular debt stock of Rs2.1 trillion without including interest, according to a note released by the Oil and Gas Regulatory Authority (OGRA) earlier this month.
Pakistan is 71.3 percent self-sufficient in natural gas production, with annual average daily consumption of 4,100 mmcfd and production of 2,923 mmcfd.
The country previously raised gas tariffs in January – its first increase in the last 2.5 years – that resulted in an increase of Rs461 billion during the last fiscal year.
OGRA says if the caretaker administration of the country does not proceed to increase prices and fund the RLNG diversion to domestic segment in the absence of subsidies, there shall be a further addition in circular debt of about Rs400 billion ($1.42 billion).
The caretaker commerce minister and ministry of energy did not respond to requests for comments until the filing of this story.
Pakistani industrialists halt production to protest gas tariff hike, causing $48 million export loss
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Pakistani industrialists halt production to protest gas tariff hike, causing $48 million export loss
- The government raised gas tariffs between 100 to 130 percent ahead of the IMF review in November
- Representative of a local industrial alliance says the decision is making Pakistani products uncompetitive
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.
