Pakistani industrialists halt production to protest gas tariff hike, causing $48 million export loss

Jawed Bilwani, Chief Coordinator of the Karachi Industrial Alliance (KIA), speaks at a press conference on December 4, 2023, discussing the industrial shutdown organized in protest of the increased gas tariffs. (AN photo)
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Updated 04 December 2023

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

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.

Murad Ali Shah takes oath as chief minister of Pakistan’s Sindh province amid opposition protest

Updated 6 sec ago

Murad Ali Shah takes oath as chief minister of Pakistan’s Sindh province amid opposition protest

  • Shah has secured third consecutive term as chief minister of southern Pakistani province
  • Opposition parties observed a ‘black day’ against alleged vote-rigging as Shah took oath

KARACHI: Murad Ali Shah, the chief minister-elect of Pakistan’s southern Sindh province, on Tuesday took oath of his office for the third time as opposition parties observed a “black day” to protest alleged rigging of Feb. 8 national election in the province.

Shah, a Stanford University graduate who has worked as a professional engineer and banker, was first elected to the top provincial office in 2016, when his party removed veteran politician, Qaim Ali Shah, from the post after criticism over his way of administering the province.

In 2018, Shah was again elected as the chief minister after his Pakistan People’s Party (PPP) won majority in the province. He served on the post until August last year. In the Feb. 8 national election, the PPP once again bagged the highest 84 provincial seats and nominated Shah as the candidate for CM’s office.

On Monday, Shah, whose father Abdullah Shah also served as the chief minister of Sindh, was polled 112 votes in the 168-member Sindh Assembly, while his opponent, Ali Khurshidi, from the Muttahida Qaumi Movement-Pakistan (MQM-P) secured 36 votes.

“Governor Sindh Kamran Tessori administered oath to Murad Ali Shah in an oath-taking ceremony at Governor House,” a spokesperson of the Sindh chief minister house said in a statement on Tuesday.

PPP Chairman Bilawal Bhutto-Zardari, Sindh Assembly Speaker Owais Qadir Shah, Deputy Speaker Anthony Naveed and newly elected members of the PPP attended the oath-taking ceremony, according to the statement.

Born in the provincial capital of Karachi in August 1962, Shah acquired his early education from St. Patricks High School and a Bachelor’s degree in Civil Engineering from the NED University of Engineering and Technology. He pursued dual Masters of Science degrees in Civil-Structural Engineering and Engineering Economic Systems from Stanford University in California.

Shah has an extensive experience of working in both public and private sectors in Pakistan, UK, Kuwait, and the US from 1986 to 2002. He worked as an engineer at multiple positions before becoming an investment banker at prestigious institutions like Citibank and the Gulf Investment Corporation.

In 2002, Shah ventured into politics and has since excelled in navigating the tricky arena, winning five provincial assembly elections and holding key provincial portfolios like revenue, irrigation, finance, energy and planning and development.

Shah’s oath-taking was held amid a protest by opposition parties, including the Grand Democratic Alliance (GDA), Jamaat-e-Islami (JI) and Jamiat Ulema-e-Islam (JUI), outside the Karachi Press Club. The protesters alleged their mandate had been stolen in the Feb. election.

“As we protest here, the thieves who stole our mandate took oath of the office,” GDA general-secretary Dr. Safdar Abbasi said, adding his group would soon announce its next line of action to reclaim its mandate.

“The masses will not accept the hybrid dictatorship,” JI’s Dr. Osama Razi told a few hundred protesters from the three opposition groups.

A day ago, jailed former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party also announced observing a black day on Tuesday against what it called an “election fraud,” however, the party did not attend the demonstration outside the Karachi Press Club.

Pakistan hopes to clear final IMF review, considers additional financing of $6-8 billion

Updated 41 min 45 sec ago

Pakistan hopes to clear final IMF review, considers additional financing of $6-8 billion

  • Pakistan has increased energy prices to meet the global lender’s conditions under the short-term $3 billion loan
  • Pakistani officials say the final decision to avail another IMF program will be made by the next elected government

KARACHI: Expressing confidence to clear the final review of $3 billion short-term financing program of International Monetary Fund (IMF) after meeting key conditions including energy price hike, Pakistani authorities are weighing options to avail another $6-8 billion program, an official privy to the situation confirmed on Tuesday.
The South Asian nation, with a population of over 241 million, increased gas prices by up to 76 percent for domestic consumers in recent months before raising petroleum prices by 1-3 percent in February. The National Electric Power Regulatory Authority (NEPRA) also notified Rs7.05 per unit hike in power prices under fuel charge adjustment (FCA) on Monday.
Pakistani authorities are confident that recent energy price adjustments to meet some of the key conditions of the global lender would help clear the second and last review of the $3 billion Stand By Arrangement (SBA) that ends in March 2024.
“With latest energy price hikes, Pakistan has met almost all the preconditions set by the IMF for end-December 2023 review including exchange rate stability, continuation of tight monetary policy and restricted circular debt flow,” an official of finance division on Tuesday told Arab News on condition of anonymity.
The official said the government was successful in restricting the circular debt flow below the fund’s stated target of Rs385 billion ($1.37 billion), though it went as high as Rs378 billion ($1.35 billion) by the end of last December.
Pakistan’s circular debt stock, outstanding payments and liabilities in the country’s energy sector, continues to swell despite taking painful measures by the government including tariff hikes that resulted in high inflation.
The circular debt within the energy sector escalated to a staggering Rs5.73 trillion (approximately $20.5 billion) by the end of last November, official data reveals. This figure encompassed a power sector debt of Rs2.7 trillion ($9.66 billion) alongside a gas sector indebtedness surpassing Rs3 trillion ($10.7 billion).
While the IMF has not yet announced dates to start negotiations with Pakistan for the second review since it was ostensibly waiting for the formation of the next government, a successful review of the program will enable the South Asian nation to receive another tranche of about $1.1 billion from the fund.
The Pakistani official said the country was exploring various options to put before the IMF to avail new long-term program in recent weeks.
“The options under consideration included the size and conditions for the new program,” he said adding: “Yes, the size could be anywhere between $6-8 billion including the climate financing factor, the RSF.”
The Resilience and Sustainability Facility (RSF) of the IMF offers affordable, long-term financing to countries committed to reforms aimed at mitigating risks to future balance of payments stability, including challenges posed by climate change and pandemic preparedness.
The official, however, clarified that nothing had been finalized yet, adding these options were still at a preliminary stage and would be suggested to the next government, if finalized.
“It will be the prerogative of the next elected government to negotiate the size, terms and condition of the next program with the fund or whether or not they want to go to the IMF,” he added.
Last year in November, Pakistan’s caretaker finance minister Dr. Shamshad Akhtar hinted the country would continue to seek financial facility from the IMF to keep its fragile economy afloat.
Pakistani economists underscored the need for a new IMF program while calling for immediate engagement with the fund.
“It is good to hear that the government is working to get another IMF program,” Dr. Sajid Amin, deputy executive director at Islamabad-based Sustainable Development Policy Institute (SDPI), said.
“The real test, however, will be how quickly the new government takes up the challenge and engages with the fund.”
The present state of economy, particularly the low foreign exchange reserves and high external debt repayments, made it imperative for the country, Amin continued, to seek the IMF support for at least three more years.
“Unnecessary delays, as we witnessed in the PTI [Pakistan Tehreek-e-Insaf] and PDM [Pakistan Democratic Movement] tenures, will hurt the economy,” he warned.
Arab News sought comments from both the IMF and the finance ministry for this story, but received no response.

Pakistan and Saudi Arabia vow to boost investment in key sectors — commerce ministry

Updated 27 February 2024

Pakistan and Saudi Arabia vow to boost investment in key sectors — commerce ministry

  • Pakistan’s caretaker commerce minister held high-level talks in the kingdom to enhance bilateral economic ties
  • Saudi officials commit to strengthening trade relations and exploring new collaboration avenues with Pakistan

KARACHI: Pakistan and Saudi Arabia have agreed to work toward increasing investment in key sectors, laying the groundwork for sustainable economic growth and prosperity, Pakistani commerce ministry said on Tuesday.
The statement comes after Caretaker Commerce Minister Gohar Ejaz returned to Islamabad after completing an official visit to the kingdom, where he engaged in high-level discussions to strengthen bilateral economic ties between the two nations.
During his visit, Ejaz met with key Saudi officials including Minister of Investment Khaled Al-Falih and Commerce Minister Majid Bin Abdullah Al-Qasabi in Riyadh.
“These meetings aimed to explore opportunities for collaboration and investment between Pakistan and Saudi Arabia,” the statement added.
Accompanied by a delegation of 20 Pakistani industrialists, Ejaz held productive discussions with Saudi ministers on various avenues for enhancing bilateral trade and investment.
The discussions emphasized the importance of increasing cooperation in sectors such as oil and gas, construction, food and agriculture.
The Pakistani commerce minister highlighted the need to elevate trade and investment relations between the two sides, underscoring the mutual benefits of closer economic cooperation.
The Saudi ministers expressed their commitment to strengthening trade relations with Pakistan, affirming their willingness to explore new avenues for collaboration, according to the commerce ministry.
During the visit, the Saudi-Pakistan Business Forum in Riyadh was held on 21 February, which was organized in collaboration with the Saudi Ministry of Commerce, General Authority of Foreign Trade and the Saudi Federation of Chambers.
The focus of the event was to connect Pakistan’s top tier business leadership with their Saudi counterparts.
Sectors that were well represented on both sides included petrochemicals, fertilizers and chemicals, food, IT, investments, textile and real estate, according to commerce ministry.

Pakistan Army, Saudi land forces conclude joint military training exercise in Multan

Updated 27 February 2024

Pakistan Army, Saudi land forces conclude joint military training exercise in Multan

  • The exercise continued from Jan. 15 to Feb. 26 with a view to foster joint employment techniques, exchange expertise
  • Pakistan and Saudi Arabia enjoy strong defense ties and regularly engage in joint air, ground and sea military exercises

ISLAMABAD: The Pakistan Army and the Royal Saudi Land Forces (RSLF) this week concluded a joint military training exercise in the eastern city of Multan that was aimed at enhancing their military capabilities and exchanging expertise, the Pakistani military said on Tuesday.

The exercise continued from January 15 to February 26 with a view to foster joint employment techniques and benefiting from each other’s experiences, according to the Inter-Services Public Relations (ISPR), the Pakistani military’s media wing.

“The training, which encompassed conventional as well as sub-conventional operations, culminated with field maneuver and battle inoculation exercise, employing air and ground forces,” the ISPR said in a statement.

The commander of Pakistan Army’s Multan Corps witnessed the exercise as the chief guest and expressed his satisfaction over mutual understanding and the training standards achieved, according to the ISPR.

Pakistan and Saudi Arabia enjoy strong defense ties and bilateral security cooperation. The two nations regularly engage in joint air, ground, and sea military exercises, while several cadets from the Kingdom, along with counterparts from other Middle Eastern nations, annually visit Pakistan to undergo specialized military training.

The joint exercise that concluded in Multan further consolidated longstanding fraternal relations between Pakistan and the Kingdom of Saudi Arabia, the ISPR added.

Pakistan policewoman praised for rescuing woman from blasphemy mob

Updated 27 February 2024

Pakistan policewoman praised for rescuing woman from blasphemy mob

  • The woman was surrounded in a Lahore restaurant by men who wrongly claimed her shirt was adorned with verses from Qur’an
  • Blasphemy is incendiary charge in ultra-conservative Pakistan, where mobs have lynched people they deem to have insulted Islam

LAHORE: A police officer who saved a woman accused of blasphemy from a mob of 200 men in eastern Pakistan has described how she had to negotiate with the crowd to lead her to safety.

The woman, who has not been named for security reasons, was surrounded in a Lahore restaurant by men who wrongly claimed her shirt was adorned with verses from the Qur’an.

Blasphemy is an incendiary charge in ultra-conservative Pakistan, where mobs have lynched people they deem to have insulted Islam.

Syeda Shehrbano Naqvi, an assistant superintendent with Punjab police, was among the first officers on the scene on Sunday.

“The crowd was pretty charged, and they were chanting slogans. They were talking about how people who commit blasphemy must be punished,” Naqvi told AFP.

A video shared on social media showed the woman sitting in a corner of a cafe protecting her face with her hands.

Crowds were later heard chanting: “The only punishment for blasphemy is beheading.”

“There was a confusion and nobody was willing to listen to us. We feared that if the dialogue didn’t begin, the woman’s life would be in danger,” Naqvi added.

In the end, Naqvi appealed with the crowd to let police determine whether Pakistan’s blasphemy laws had been breached.

Officers then formed a human chain to help lead the woman out of the restaurant.

The woman was in fact wearing a shirt with the Arabic word for “beautiful” written on it.

“We have experienced at least two such events before in Lahore. Religious crowds are always pretty charged and we had no idea what we were going to deal with,” Naqvi said.

The officer has since been recommended for an award by the chief of Punjab police.

On Monday, Maryam Nawaz Sharif, the first woman to be chief minister of a Pakistani province, took her oath as the head of Punjab’s province assembly.

In her inaugural address, she highlighted Naqvi’s actions: “I want to praise the lady officer who has saved the life of a woman.”

Police have not made any arrests of those involved in the mob aggression, while the victim gave a video statement apologizing for causing offense.