Business Leaders Warn of Industrial Collapse Amid Exorbitant Gas Bills – CustomsNews.pk Daily

PM urged to take urgent notice of anti-industry move, freeze controversial levy

KARACHI: The Karachi Chamber of Commerce & Industry (KCCI) and all seven industrial town associations and textiles exporters’ bodies, while expressing deep concerns over the exorbitant and retrospective gas bills issued to industries, urged Prime Minister Shehbaz Sharif, Energy Minister (Petroleum Division) Ali Pervez Malik, Energy Minister (Power Division) Awais Leghari and National Coordinator SIFC Sarfaraz Ahmed to take urgent notice of what they termed an anti-industry move that threatens to shut down industries, cripple exports, and turn Pakistan into an import-dependent economy.

Addressing a joint press conference at KCCI on Thursday, the business leaders appealed to the government to immediately freeze the controversial levy retrospectively charged for four months, which has raised gas bills from millions to tens of millions of rupees, an impossible burden for industries already on the brink.

Chairman Businessmen Group (BMG) Zubair Motiwala joined the press conference via Zoom, while Vice Chairman BMG Jawed Bilwani, President KCCI Rehan Hanif, Senior Vice President Muhammad Raza, Vice President Muhammad Arif Lakhani, and representatives of all industrial town and textiles exporters’ associations were also present.

Chairman BMG Zubair Motiwala recalled that during General Pervez Musharraf’s regime, industries were encouraged to establish captive power plants to overcome the electricity crisis, with a clear assurance from the government that gas would be supplied for their operation. However, he lamented that the present surge in gas tariffs, coupled with heavy taxes and levies, has made captive power generation financially unsustainable, turning billions of rupees invested in these plants into a complete waste.

“It seems the IMF, after seeing Pakistan’s industries still standing, now wishes to turn us into an import-oriented economy,” he remarked, urging the government to compare Pakistan’s cost of doing business with India, Bangladesh, Sri Lanka, China, Cambodia, and Vietnam.

He explained that the textile sector, comprising seven manufacturing stages, depends on energy at each level. “When energy costs are far higher than Bangladesh’s, how can we compete? Give us the same cost of doing business, if we still fail, hold us accountable”, he said.

Motiwala rejected blaming industries for circular debt, clarifying that industries maintain 98% payment compliance, while domestic sector losses reach 47%. He proposed shifting domestic gas consumers to cylinders, as practiced globally, reserving piped gas for industries to reduce losses and improve recovery.

He strongly condemned the imposition of a Rs791 per mmbtu levy on captive power plants, introduced under the pretext of a cost differential with grid electricity. “No such differential actually exists,” he asserted, explaining that the calculation was misleadingly based on four-hour peak electricity rates instead of a 24-hour average. “Had the average rate been applied, the difference would not exceed Rs238 per mmbtu,” he argued, terming the Rs791 levy as “irrational, unjustifiable, and absolutely unbearable for industries.”

“If this retrospective levy is enforced, industries will collapse,” he warned. “These actions serve those who don’t want industries to survive in Pakistan.”

He appealed to the Prime Minister to freeze the levy, explain its calculation formula, and engage with industrial stakeholders. “We are ready to pay any legitimate charge, but not a baseless one that will destroy Pakistan’s industrial and export base,” he affirmed.

Vice Chairman BMG and Former President KCCI Jawed Bilwani criticized the government and OGRA for deliberately planning to shut down industries through irrational gas pricing. “Industries are receiving inflated gas bills worth tens of millions without any transparent formula or explanation,” he said, adding that it was shocking to see that the levy, which itself is a tax, is subjected to GST, which is highly unjust as this would further choke the liquidity.

He revealed that KCCI had written to the government seeking urgent dialogue, but was told to file online complaints with promised 24-hour responses, none of which were ever received. “The government is misleading the business community”, he lamented.

Bilwani added that even SSGC officials are unsure how these inflated bills were calculated. “Gas companies are warning of excessive pressure in pipelines and potential explosions due to reduced demand, yet no one is listening,” he said, adding that there is not a single country in the world where gas rates are revised every month, creating uncertainty for industries. He noted that within just one year, the gas tariff has been increased from Rs852 per MMBtu in Jan 2023 to Rs4259 per MMBtu, indicating a huge hike of 403 percent, and emphasized that the government must develop effective strategies to keep gas tariffs stable throughout the year.

He emphasized that wrong energy policies are reducing gas utilization, hurting exports, and fueling unemployment. “These irrational levies must be withdrawn immediately to save Pakistan’s economy,” he concluded.

On the occasion, President KCCI Rehan Hanif said the business community is “deeply distressed” by the unprecedented gas tariff hikes and unjust levies imposed on industrial consumers. “Such arbitrary decisions have triggered fear and uncertainty across the industrial sector already battling high costs and falling exports,” he said.

He noted that leading exporters nationwide have expressed grave concerns and may shift operations abroad if the current gas pricing continues. “Pakistan cannot afford industrial shutdowns or export disruptions in its fragile economic state,” he stressed, urging the government to engage immediately with industry stakeholders to find a sustainable solution.

While appreciating strong participation of industrial town and textiles exporters’ associations in KCCI’s emergency press conference and describing it as a powerful demonstration of unity and resolve, he stressed that the rulers must realize that Pakistan’s economic survival depends on its industries and exporters. Policies that suffocate production will only deepen unemployment, inflation, and instability.

President KATI Ikram Rajput urged the Prime Minister to immediately hold consultations with all stakeholders to resolve the unjust gas levy, warning that at a time when exports are Pakistan’s only economic lifeline, such measures that raise business costs will cripple industries and destroy export potential.

Former President SITE Association of Industry Saleem Parekh stated that the Rs791 per MMBtu levy, imposed four months ago, has raised the gas tariff from Rs3,500 to Rs4,991 including the controversial levy and taxes. He said the business community strongly contested this move, presenting detailed calculations to the federal cabinet at a meeting in CM House, proving that the levy was unjustified. “It was then hinted at that meeting”, he added, “that the government’s real intent is to force industries to shift from gas-based generation to the national grid.”

President NKATI Faisal Moiz warned that the levy on gas bills would have a devastating impact on the economy. He said it is unjust that whenever industries seek relief, the IMF is used as an excuse, and the burden is shifted onto the very sector that earns foreign exchange for the country. While strongly condemning the levy and demanding its immediate withdrawal, Faisal Moiz cautioned that if exports decline and industries shut down, the economy will collapse.

Representative of SITE Superhighway Aamir Sarfaraz, while endorsing KCCI’s stance, said that if Pakistan’s economy is to move forward and business conditions are to improve, such anti-industry measures must be withdrawn immediately. He warned that with multinational companies already exiting Pakistan, it will not be long before local businesses also follow suit if the current environment persists.

Spokesperson of Landhi Association Siraj Mannoo stated that the purpose of imposing this heavy levy and raising gas tariffs appears to be to force industries to shut down their captive power plants and shift to the unreliable national grid. He warned that this is impossible given the inconsistent and fluctuating power supply, which endangers the high-tech machinery of major exporters operating in the Landhi industrial area and all other areas.