Karachi, February 23, 2024 – The Karachi Chamber of Commerce and Industry (KCCI) issued a dire warning on Friday, indicating the possibility of a mass protest by jobless individuals due to the closure of industries.
KCCI President Iftikhar Ahmed Sheikh expressed deep concerns over the escalating cost of doing business, primarily attributed to an unbearable surge in energy tariffs. Sheikh feared that the relentless increase in gas and electricity tariffs might soon lead to widespread unemployment and public unrest, not only in Karachi but across the entire country.
Despite fervent protests by various stakeholders, including the Karachi Chamber, against the steep hikes in gas and electricity tariffs, policymakers appear indifferent to the alarming situation. Sheikh highlighted the potential devastating impact on the economy, citing the closure of hundreds of industrial units and small to medium-sized enterprises. He emphasized that this trend could result in shrinking production activities, dwindling exports, and a surge in unemployment.
Energy Minister assurances notwithstanding, Sheikh pointed out that no concrete steps have been taken to alleviate the soaring cost of doing business. This lack of action has eroded the confidence of industrialists, prompting some to contemplate relocating their production units to countries offering Special Economic Zones (SEZs) with stable and affordable energy rates. The uncertainty surrounding energy tariffs in Pakistan has created an unfavorable business environment, making it challenging for industrialists to plan for the future.
Sheikh noted that neighboring countries are extending invitations to set up units within their SEZs, ensuring availability of industrial inputs, particularly gas and electricity, at reasonable rates for an extended period. In contrast, the unpredictable nature of energy tariffs in Pakistan is deterring investment and jeopardizing the sustainability of local industries.
The president of KCCI also criticized the Caretaker government for allowing unprecedented increases in gas and electricity tariffs, actions that exceed its constitutional mandate. He expressed concern that initiatives by the Special Investment Facilitation Council (SIFC) to maintain economic stability might be in vain if immediate steps are not taken to reduce the cost of doing business.
Sheikh underscored that while the government seeks to reduce circular debt, the continuous rise in energy tariffs is exacerbating the financial burden on commercial and industrial consumers, potentially leading to a disastrous economic situation. He highlighted the alarming increase in circular debt to a record Rs5.73 trillion, primarily attributed to government inefficiencies in dealing with theft and line losses in the gas and electricity sectors.
Furthermore, Sheikh pointed out the disparities in electricity costs compared to regional competitors, emphasizing that the current rates are unsustainable for both general and export-oriented industries. Urgent relief measures, including the release of earmarked funds for Karachi-based industries, were proposed to address the immediate crisis.
The KCCI president called upon the government to fulfill commitments, implement decisions to lower power tariffs, and address the concerns of Karachi-based industries. He emphasized the need for a fair and supportive environment to prevent the irreversible closure of industries, urging lawmakers in Islamabad to take immediate action to save the economic backbone of Pakistan.
