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Pakistan’s Iron & Steel Industry on the brink of collapse, looks government intervention.

Khalid Tawab, Chairman of the Iron & Steel Merchants Association, warned that the Pakistani economy is at risk and industries are on the verge of collapse due to uncompetitiveness with neighboring countries. He said that exorbitant energy prices have forced many association members to shut down their mills.

“The recent hike in electricity and gas charges for industries has made it unaffordable for our members to continue production and business activities, Tawab stated. We urge the government to reduce the power tariff to 9 cents/kWh and markup to 15% to revitalize the economy and boost exports, investment, and employment.

Tawab emphasized that prompt action is necessary to stimulate industries across all sectors, lest the unemployment rate spiral out of control. He also demanded that the government immediately abolish all agreements with IPPS and procure electricity for the national grid from cheaper and cost-effective sources without any strings attached, such as capacity charges.

He said that the IPPS is charging Rs 24 per unit in electric bills as capacity payments, which will continue to increase. We are sinking under their present Rs 2 trillion capacity payment charges for their shut and partially operational IPPS. Khalid said that we can get relief and move forward by cancelling all agreements with IPPs without any further loss of time, as they have severely paralyzed the national economy.

Khalid Tawab highlighted that Pakistan has an installed generation capacity of over 40,000 MW, while peak demand and transmission capacity is merely 25,000 MW, resulting in significant excess capacity. He stated that providing electricity at 9 cents/kWh would result in a substantial increase in exports (USD 6 billion), additional demand on the grid (300 MW), revenue generation (Rs 500 billion), and a reduction in debt servicing (Rs 240 billion).

Tawab stressed the need for the government to engage with stakeholders, address their grievances, and create a level playing field and business-friendly environment. He also called for a reduction in bank interest rates, citing the current 12 percent inflation rate.

Tawab added that the business community can contribute significantly to tax generation if given the opportunity.

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