KARACHI: Pakistani industrialists warned on Wednesday that if energy prices are not slashed by approximately 43 percent, various industries may not survive as high input costs would lead to the loss of export markets, and eventually trigger industrial closures.
Pakistan, already reeling from skyrocketing inflation, has increased gas prices twice since November 2023. The latest increase was notified on Feb. 15, 2023, to meet the conditions of a $3 billion International Monetary Fund (IMF) bailout program.
The IMF has pointed out that liquidity conditions in Pakistan’s power sector were acute, with a buildup of arrears and frequent power outages. The arrears, a form of public debt that builds up due to subsidies and unpaid bills, were a major issue in the eight months of negotiations between the lender and Islamabad before a deal was reached last year for the bailout package.
However, Pakistani industrialists say the international competitiveness of Pakistan’s textiles and apparel exports is being continuously eroded by ever-increasing energy prices that, on average, are over twice than those of competing countries.
“Energy, electricity or gas is the raw material of the product and it makes about 20 percent to 25 percent, and up till now, within two years, it has almost increased to double,” Saquib Fayyaz Magoon, acting president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said at a press conference in Karachi.
He said the price hikes have made Pakistani exporters “uncompetitive” in the export markets by a large margin.
Magoon said electricity prices for consumers are hovering at 16.7 cents per kilowatt, adding that the prices of gas for industries have been jacked by over 222 percent from Rs.852 ($3.05) per mmBtu to Rs. 2,750 ($9.83) per mmBtu.
The acting FPCCI head reiterated that this month, Pakistan’s cabinet approved a significant increase in gas prices, hiking them up to 67 percent for residential users and by 700 percent for fertilizer plants.
“At the current energy rates, the survival of the industries is at stake,” Magoon said. “We are demanding an immediate reduction of the electricity rate from the current 16.7 cents to 9 cents (43 percent) because our regional competitors are getting electricity at half of that price.”
Asif Inam, chairman of the All Pakistan Textile Mills Association (APTMA), said the industry is paying cross-subsidy, which means that industries are paying for losses of other industries that are non-productive.
“If the government is not coming up with the right set of policies to keep the industrial wheel in motion, a large chunk of the country’s industries would eventually fall victim to high input cost and close down,” Inam said.
“So cross-subsidization must end to protect trade and industry.”
Pakistan’s exports have increased by 7.8 percent to $17.8 billion during the seven months of the current fiscal year, FY24. The textile sector contributed $9.7 billion or 54.4 percent to the overall exports of the country, as per official data.
However, FPCCI officials warned that the country’s exports will decline after the rise in the energy rates due to the factor of regional competitors, where power tariffs were still lower. In Vietnam, Bangladesh, and India, the power tariff stands at 7.2 US cents, 6 US cents, and 8.6 US cents per kilowatt.
The APTMA head noted that while the country has a 47,000 megawatt-installed generation capacity, its transmission and distribution capacity is only 28,000 megawatts.
“Independent power producers (IPPs) on take-or-pay basis are causing enormous financial burden on consumers across the board, be it households, commercial or industrial [users],” Inam said.
Rising energy costs may decrease exports, trigger industrial closures, warn Pakistani industrialists
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Rising energy costs may decrease exports, trigger industrial closures, warn Pakistani industrialists
- Pakistani industrialists demand reduction in electricity prices by 43 percent to compete with regional countries
- Pakistan has increased electricity, gas prices to comply with key conditions of an International Monetary Fund program
Pakistan offers incentives to New York firms seeking South and Central Asia expansion
- Pakistan’s envoy to the US holds a meeting with the head of the New York Chamber of Commerce
- The United States is already Pakistan’s largest export market for textiles, apparel and leather goods
ISLAMABAD: Pakistan has offered New York-based businesses investment incentives to expand their footprint in South and Central Asia, citing its strategic location as a key advantage, state-run media reported on Saturday.
Seeking to position itself as a pivotal trade and transit hub, Pakistan has sought to involve other countries in its economic plans, particularly within its own neighborhood where it has offered landlocked Central Asian states access to its ports to facilitate their connection to global markets.
US-Pakistan trade relations have long been significant, with the US serving as Pakistan’s largest export market for textiles, apparel and leather goods.
Pakistan’s Ambassador to the US, Rizwan Saeed Sheikh, met with Mark Jaffe, Head of the Greater New York Chamber of Commerce, to discuss strategies for enhancing bilateral trade between the two nations.
“The Pakistani envoy underscored Pakistan’s liberal investment regime, strategic geographic location, and incentives for foreign investors, emphasizing the benefits for New York businesses seeking to expand their footprint in South and Central Asia,” the Associated Press of Pakistan (APP) news agency reported.
Jaffe expressed interest in Pakistan’s textile, leather, surgical and information technology sectors apart from outlining efforts to promote trade and investment, it added.
Ambassador Sheikh appreciated Jaffe’s support and interest in Pakistan’s 5th International Textile and Leather Exhibition 2024 held last month in the country’s southern metropolis of Karachi, APP said.
He also invited the New York City chamber to participate in the 4th Engineering and Healthcare show in Lahore next year.
The Pakistani envoy highlighted how Pakistan’s Generalized System of Preferences Plus (GSP+) status in the European Union and Free Trade Agreement with China could provide added advantages for foreign investors working in his country.
The meeting took place at a time when Islamabad is seeking to bolster trade and investment relations with allies to stabilize its fragile $350 billion economy as it faces an acute balance of payment crisis amid soaring inflation and surging external debt.
Companies employing Chinese nationals being asked to hire ex-military servicemen for security — Sindh Police
- Sindh Police reviews security measures for Chinese nationals amid increase in attacks targeting them
- Intelligence agencies conducting security audit of guards hired to protect Chinese nationals, say police
KARACHI: Companies, organizers, hosts, sponsors and any other entities in Pakistan that employ Chinese nationals are being asked to hire the services of former military personnel for security purposes, Sindh Police said this week amid increasing attacks on Chinese citizens in the country.
A string of recent attacks on Chinese nationals in Pakistan have caused Beijing to worry about the security of its citizens. Separatist militants in Pakistan’s southwestern Balochistan province have carried out attacks against Chinese interests this year, blaming Islamabad and Beijing for exploiting the gas-and-oil-rich province. Both deny the allegations.
Last month, a suicide blast near the airport in Pakistan’s southern port city of Karachi killed two Chinese engineers while a security guard shot and injured two Chinese nationals in Karachi this month.
Sindh Inspector General of Police Ghulam Nabi Memon held a meeting at the Central Police Office in Karachi on Thursday to review the security of Chinese nationals in the province.
“DIG Special Protection Unit, while briefing the committee formed to review security measures of Chinese citizens, said the Internal Bureau and Special Branch are conducting a security audit of the private security guards assigned to protect Chinese citizens,” a statement from the police said on Friday evening.
“While project organizers, hosts/sponsors are also being made to hire the services of ex-military servicemen.”
The statement said that the SPU would conduct joint training exercises continuously to meet any emergency security situation.
“A hotline number has been provided for the facilitation of Chinese citizens and for immediate contact with law enforcement agencies,” it said.
“He further said that suggestions have also been given to project owners/sponsors to strictly implement security standard operating procedures, including a security audit of private security companies.”
China is a major ally and investor in Pakistan that has pledged over $65 billion in investment in road, infrastructure and development projects under the China-Pakistan Economic Corridor (CPEC) project, at the heart of which lies the Gwadar port in Balochistan.
Pakistan says attacks targeting Chinese nationals are aimed at disrupting its relations with China and destabilizing CPEC.
Pakistan’s Punjab conducts successful artificial rain trial amid smog crisis
- Punjab carries out cloud seeding in Jhelum, Chakwal, Talagang and Gujar Khan
- Toxic smog due to air pollution has enveloped Punjab province since last month
ISLAMABAD: The Punjab government has conducted a successful artificial rain trial using local technology to reduce smog, state-run media reported on Saturday, as the province grapples with deteriorating air quality and takes measures to protect millions from pollution.
State broadcaster Radio Pakistan said the provincial government carried out “cloud seeding” in the eastern cities of Jhelum, Chakwal, Talagang and Gujar Khan on Friday, which resulted in rainfall in Jhelum and Gujar Khan within a few hours.
Cloud seeding is a weather modification technique that improves a cloud’s ability to produce rain or snow by introducing tiny ice nuclei into certain types of subfreezing clouds.
In December last year, a cloud seeding experiment was carried out by the United Arab Emirates to bring about artificial rain in Lahore. The UAE sent two special planes and a technical team, which waited in Lahore for several days for the right conditions before carrying out its mission.
“Punjab Chief Minister Maryam Nawaz Sharif congratulated all scientific experts and associated institutions on the success of this artificial rain experiment,” Radio Pakistan said.
It said the experiment was conducted due to the combined efforts of the Punjab government, Pakistan Army’s Scientific Research and Development experts, Army Aviation, PARCO and the Environmental Protection Agency.
“This success will open new avenues for technological advancement in Pakistan and help alleviate weather-related issues for the public,” it said.
The development takes place as Punjab extended school closures in smog-hit major cities from Nov. 17 by a week, with thousands hospitalized as the country battles record air pollution.
Toxic smog has enveloped Punjab’s cities, especially its cultural capital of Lahore, since last month. Smog occurs when cold air traps dust, low-grade diesel fumes and smoke from illegal stubble burning on fields.
As the air quality deteriorates, the provincial government has taken certain measures such as closing schools, banning the entry of heavy transport vehicles in Lahore on specific days and banning entry to parks, zoos, playgrounds and other public spaces.
Other parts of South Asia are also dealing with high levels of pollution and Punjab blames neighboring India for contributing to its hazardous air quality.
New Delhi, the world’s most polluted capital, has banned non-essential construction, moved children to virtual classrooms and asked residents to avoid using coal and wood from Friday.
India denies Kabaddi team permission to tour Pakistan amid political tensions
- India’s Kabaddi team was scheduled to play friendly matches against Pakistan on Nov. 19, 21 and 23
- Development takes place amid India’s refusal to allow cricket team to tour Pakistan for Champions Trophy
ISLAMABAD: The Indian government has denied permission to its Kabaddi team to travel to Pakistan for a bilateral series scheduled from Nov. 19-23, state-run media reported this week amid political tensions between the two countries.
Political tensions between nuclear-armed neighbors India and Pakistan have restricted cultural exchanges and bilateral sports events between the two nations.
The two neighbors have fought three wars, two of them over the Muslim-majority Himalayan region of Kashmir, which they both claim in full but rule in part.
Kabaddi, a sport that originated in South Asia, is popular in both countries. The game is played with two teams of 12 players, seven on court, and five in reserve. It consists of two halves of 20 minutes each during which two teams compete., alternating between defense and offense.
“Our counterparts in India have conveyed their inability to send their team to Pakistan,” the Associated Press of Pakistan (APP) quoted Pakistan Kabaddi Federation (PKF) Secretary Muhammad Sarwar Rana as saying on Thursday.
“We regret this decision as we had eagerly anticipated hosting them here.”
The Indian team was scheduled to play against Pakistan on Nov. 19 in Katarpur, Nov. 21 in Lahore and Nov. 23 in Bahawalpur, APP said. It added that the PKF was trying to arrange alternative exhibition matches due to the cancelation.
The development takes place a few days after the Pakistan Cricket Board (PCB) said it had been informed by the ICC that the Indian government had denied its cricket team permission to travel to Pakistan for next year’s Champions Trophy tournament.
The PCB has reportedly sought clarification from the ICC on India’s refusal.
India’s national cricket team has not toured Pakistan since 2008 due to soured political relations between the two neighbors, who play each other only in global multi-team tournaments at neutral venues.
Pakistan hosted the Asia Cup last year but was forced to shift all of India’s matches to Sri Lanka under a “hybrid model” after India refused to send its team to Pakistan.
APP said the Indian blind cricket team was also awaiting its government’s nod to participate in the upcoming fourth edition of the T20 World Cup, scheduled to be held from Nov. 23 -Dec. 3 in Pakistan’s Lahore and Multan cities.
“According to media reports, despite securing a No Objection Certificate (NOC) from the sports ministry, the Indian blind team has yet to receive final approval from the Ministry of Home Affairs and Ministry of External Affairs,” it said.
IMF staff concludes Pakistan visit, urges Islamabad to decrease state intervention in economy
- IMF delegation visited Pakistan from Nov. 12-15 to discuss economic policies, reform efforts
- Both sides agreed Islamabad needs to mobilize revenue from “untapped tax bases,” says IMF official
ISLAMABAD: The International Monetary Fund (IMF) announced this week it had concluded its state visit to Pakistan, calling on Islamabad to decrease state intervention in the economy, mobilize revenue via tax reforms and adopt prudent fiscal policies.
The IMF released its statement late Friday as a delegation led by its Pakistan mission chief, Nathan Porter, completed a five-day trip to the country during which it discussed the performance of a $7 billion loan program approved in September.
The IMF has clarified Porter’s visit is not part of the first review of the loan program, which is not scheduled to take place before the first quarter of 2025.
The international lender has repeatedly called on Pakistan to undertake tax and energy reforms as well as privatize state-owned assets which it says are critical to revitalize its fragile $350 billion economy.
“Structural energy reforms and constructive efforts are critical to restore the sector’s viability, and Pakistan should take steps to decrease state intervention in the economy and enhance competition, which will help foster the development of a dynamic private sector,” Porter said in a statement.
The IMF official said both sides agreed with the need for Islamabad to continue prudent fiscal and monetary policies, mobilizing revenue from “untapped tax bases” and transferring greater social and development responsibilities to provinces.
“Strong program implementation can create a more prosperous and more inclusive Pakistan, improving living standards for all Pakistanis,” Porter said.
In an earlier statement on Friday, the IMF urged Pakistan to digitalize its budget preparation and execution processes to improve fiscal monitoring and reporting to overcome deviations from the planned budgets.
IMF loan bailouts are critical for Pakistan, which narrowly avoided a sovereign default last year before clinching a last-gasp $3 billion loan from the international lender.
Pakistan’s finance minister has repeatedly stressed implementing painful reforms to ensure the country does not seek loans repeatedly from the global lender at exorbitant interest rates.
