Karachi Chamber of Commerce and Industry (KCCI) President Younus Muhammad Bashir expressed deep concern over descending exports and reports of further increase in gas tariff from July 1, 2016, and appealed the government to immediately withdraw gas infrastructure development cess (GIDC) from the date it was implemented and also withdraw the recently implemented 23 per cent increase in gas tariff in order to save Pakistan’s exports from further deterioration.
In a statement issued on Wednesday, the KCCI president warned that if appropriate steps were not taken on war footing basis, there would be further decline in terms of exports, especially in the value-added sector.
He was of the view that industries in Sindh were being penalised in terms of tariffs as the industries in North had been receiving gas at a much lower price (RLNG).
Younus Bashir requested the ministry of petroleum and natural resources and the ministry of finance to seriously look into the production and exports, particularly in the textile sector which had gone down by 14 per cent.
He said the business and industrial community of Karachi had been agitating and informing about the descending exports which had been occurring neither because of the inferior quality nor because of the quality of raw material but merely because the cost of manufacturing was too high as compared to the neighbouring countries.
Referring to a recent announcement by the petroleum planning and analysis cell of ministry of petroleum and natural gas, Government of India, the KCCI president informed that they had announced a reduction of 20 per cent from April 1, 2016, to September 30, 2016, and the new rate of US$3.06/MMBTU on Gross Calorific Value (GCV) basis had been notified by the Indian government which would bring in more competition and would result in further decline exports of Pakistan. It is pertinent to mention that the Indian gas tariff rate was already 8 per cent lower as compared to Pakistan which has been reduced further by 20 per cent, bringing gas tariffs down to around Indian Rs321/ MMBTU whereas in Pakistan the gas tariff stood at an exorbitant level of Rs 488 plus GIDC of Rs 100 and 23 per cent increase in tariff, escalating it to Rs 700/MMBTU which indicates a difference of around 56 per cent.
“It is needless to mention that other challenging aspects remain unresolved including zero rating of export-oriented sectors, resolution of pending sales tax refunds, resolution of DLTL claims, customs rebates and other pressing problems which have already enhanced our cost of manufacturing”, Younus Bashir added.
He urged Prime Minister Nawaz Sharif, Federal Finance Minister Ishaq Dar and Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi to immediately withdraw GIDC from the date it was implemented and also withdraw 23 per cent increase in gas tariffs in order to create an enabling environment for Pakistani exporters which have been facing stiff competition and find it very difficult to stay afloat due to high cost of manufacturing.
He said although the exporters were compelled to sell under duress with a stay order from the court of law in both the implications (GIDC and 23 per cent increase in gas tariff) but there was a hanging sword which had taken away the peace of mind of the exporters. While entering into export agreement with foreign buyers, this factor had become the biggest hindrance, he added.
“Most of the exporters are confident that the decision will come into their favour and their sale minus the impact of GIDC and 23 per cent increase in gas tariff will become a positive decision,” he further added.