KCCI welcomes a cut in POL prices, and hopes to see a similar cut in electricity tariff

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Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce Industry (KCCI) Iftikhar Ahmed Sheikh, while appreciating the Caretaker Prime Minister Anwarul Haq Kakar’s government for announcing substantial reduction in petroleum price by Rs40 per liter, said that this was the right decision taken due to decline in international market and improvement in rupee value against dollar which would provide some relief to common man and the business community in the ongoing era of inflation, besides having a positive impact on the economy.

In a joint statement issued, Chairman BMG and President KCCI said that this was the second consecutive cut in petroleum prices which would certainly help in bringing down the inflation to some extent but effective price control mechanism and strict implementation of government rates of various household products must be ensured with a view to provide relief to inflation-stricken poor masses.

Chairman BMG Zubair Motiwala expressed hope that the Care Taker Prime Minister would also take measures to reduce the power tariffs and devise effective strategies for dealing with the ongoing gas load shedding and low gas pressure being suffered by the industries situated in all seven industrial town zones of Karachi. “Gas supply situation is worsening day by day and it has become impossible for the industrialists to smoothly carry out production activities and meet the export targets. Steps have to be taken on war footing basis so that the wheels of industries keep on spinning”, he said but feared that the situation may worsen further during forthcoming winter season if the lawmakers do not pay prompt attention to this pressing issue.

Zubair Motiwala pointed out that KE’s sales to industries have dropped by 9.5 percent in the last three months since electricity tariff started increasing. “The concerned ministries and the bureaucracy are adopting the easiest way to abide by the IMF commitment to control circular debt. In this regard, they go for raising the energy rates which is not a wise move as there are several other possibilities like reducing thefts, pilferages and technical line losses etc. along with review of agreements with Independent Power Producers (IPPs) with regards to idle capacity charges in light of appreciating dollar which was hovering around Rs100 at the time of these agreements but was now at around Rs280, indicating a huge difference of about 200 percent. These and several other measures should be taken before penalizing the consumers”, he stressed, adding that cross-subsidization was one of the highest factors which enhances gas and electricity tariffs.

“Increase in gas price for local industries would be last nail in the coffin. The recent drop in energy consumption clearly indicates that industries are not functioning and closing down, hence,  in order to stop this nosedive of deindustrialization, it is necessary that practical and pragmatic steps are taken”, Zubair Motiwala added while appreciating the government passing on the benefits of reduced oil rates in the international market to the people of Pakistan.

President KCCI Iftikhar Ahmed Sheikh said that the reduction in petroleum prices would reduce the cost of production which would ultimately extend a direct benefit to the people. “The industrial sector would definitely benefit from the reduction in POL prices mainly as fuel and electricity are regarded as the lifeline of any economy and play a pivotal role in the socio-economic development of a country.”

He stated that tariffs of Inter-city transportation must also be brought down which are immediately raised whenever POL prices go up but meagerly reduced when the prices go down. “We need self-assessment as to how prices can be reduced after cut in oil prices.”

President KCCI appealed the government to link the transporters tariffs with the prices of prevalent price of petroleum products by devising a formula whereby the benefits of reduced oil prices trickle down to common masses and the industries.

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