KARACHI: In a groundbreaking move, Provincial Minister for Revenue, Industries, and Commerce, Muhammad Younus Dagha, has unveiled a transformative approach to gas pricing for industries. Recognizing the global norm of subsidized gas tariffs for industries, Dagha emphasizes the need for structural changes to align Pakistan with international best practices.
Challenging Cross-subsidization: A Paradigm Shift
In a recent address at the Karachi Chamber of Commerce & Industry (KCCI), Dagha expressed concern over the prevailing cross-subsidization model in Pakistan. Contrary to the global trend, where industries bear reasonable gas costs, he highlighted that in Pakistan, industries are shouldering the burden of subsidizing other sectors. This, he contends, is not a sustainable or wise practice.
Unveiling the Need for Unity in Karachi’s Industries
Dagha identified the lack of unity among Karachi’s industries as a significant hurdle. He stressed that this lack of a unified voice hinders the business community’s ability to address energy crises effectively. Drawing a comparison with other cities like Faisalabad and Lahore, where unified voices have influenced government decisions, he underlined Karachi’s need for a stronger collective stance.
Paving the Way for Change: Dagha’s Commitment
While acknowledging the provincial government’s limited mandate in resolving energy crises, Dagha assured proactive efforts. He pledged to facilitate a meeting between KCCI representatives and the Chief Minister of Sindh, aiming to collectively propose structural changes. These changes, once endorsed by the provincial government, could then be presented to the federal government.
Addressing Electricity Consumption Concerns
Responding to concerns raised by Chairman Businessmen Group (BMG) Zubair Motiwala, Dagha recognized the misrepresentation of incremental electricity consumption during winter to the International Monetary Fund (IMF). He urged the business and industrial community to engage with the IMF’s Islamabad Office, presenting their reservations to rectify this issue.
Unbundling Karachi’s Electricity Supply: A Necessity
Dagha shed light on the unique situation in Karachi, where the electricity supply system remains entirely unbundled. Unlike the rest of Pakistan, where distribution and generation are separate, Karachi Electric (KE) stands as the sole provider responsible for both. This, he believes, contributes to additional costs borne by the citizens of Karachi.
Gas Tariff Hike: A Looming Threat to Industries
Zubair Motiwala, via Zoom, highlighted a drastic decline in industrial performance since November 2023. He expressed concern over the 25 percent drop in Sui Southern Gas Company’s (SSGC) gas offtake, attributing it to the exorbitant gas tariffs. Motiwala criticized the government’s decision to impose a 130 percent gas price hike, endangering the very existence of industries relying on gas for production.
Seeking Justice for Karachi’s Industries
Motiwala emphasized the injustice faced by Karachi’s industries, representing 10 percent of the country’s population yet bearing 54 percent of exports and 68 percent of national revenue. The abrupt gas price hike, ostensibly to address a circular debt not caused by industries, poses a severe threat. Motiwala advocated for a phased approach to circular debt reduction, sparing industries from sudden and crippling tariff hikes.
Urgent Call for Reduced Energy Tariffs
President KCCI Iftikhar Ahmed Sheikh echoed these concerns, highlighting the perilous state of the economy due to exorbitant hikes in gas and electricity tariffs. He warned of a domino effect, with industries shutting down and the economy reaching a point of no return if immediate relief in the form of reduced energy tariffs is not granted.
Infrastructure Woes: A Cry for Attention
Sheikh drew attention to the dilapidated state of infrastructure in Karachi’s industrial zones, urging the Sindh government to intervene. Poor infrastructure not only impedes daily operations for industrialists but also discourages foreign buyers from visiting factories.
Embracing Digitalization for a Better Future
While commending the Caretaker Sindh Government’s digitalization initiatives, Sheikh extended support in overcoming bureaucratic hurdles. He emphasized the importance of creating an enabling business environment to navigate the challenging landscape.
In conclusion, Younus Dagha’s vision and commitment to restructuring the gas pricing strategy present a ray of hope for Karachi’s industries. The call for unity, justice, and urgent action reverberates through the business community, advocating for a more equitable and sustainable energy framework.