KARACH : More than 33 industrial units, including re-rolling mills, textile units, have ceased operation due to recent increase in gas tariff by the government. Most of these units are located in Korangi industrial area.

Taking to Business Recorder, Korangi Association of Trade and Industry (Kati) Chairman Shaikh Fazl-e-Jalil said on Wednesday that the association was informed that 33 units had stopped production due to unbearable high cost of captive power production and declining sale.

He said that since the re-rolling mills and textile sector, consumed gas as raw material, it was impossible for them to continue operation, as the cost of production had gone up considerably. He said that the government had increased gas prices by 31 percent, and added that. a 68 percent increase in the gas price for captive power plants was tantamount to murder of industry, especially textile industry.

The Kati Chairman said that increase in gas tariff would not only hit industrial growth, but also it would give raise to industrial cost of production by 18 to 20 percent. He said that gas was the basic raw material of several industries and the conversion cost increased to 68 percent, thus giving rise to their captive power production.

He said that 31 percent increase in the steam production, which was more than 50 percent of conversion cost, would increase to almost 25 percent, making it impossible to compete in the global market against regional competitors.

He said that the gas was indigenous product, hence its prices should not be revised upward in present scenario, and criticised abrupt increase in prices without consulting the leaders of business community and representatives of trade bodies. Chairman of Federal B Area Association of Trade and Industry (FBRATI) Idrees Gigi said that industries were in big trouble due to increase in gas, oil and other prices.

He urged the government to withdraw the recent increase in gas tariff, otherwise the industrial sector might have to exercise the option of closing down of factories. Replying to a question, he said that real pinching impact would come from August when the industries would receive fresh bills based on new tariff.

Referring to the withdrawal of research and development (R&D) facility, he said the government resorted to increasing oil, gas power tariff, crippling the industrial production and exports, ultimately encouraging massive import of goods in large numbers.

Site Association of Industry (Sai) Chairman Muhammad Nisar Shekhani feared that if the government did not revise gas tariff downwards, all spinning units, having captive power generation, would go out of production.

He said that a meeting was held on Wednesday at All Pakistan Textile Mills Association (Aptma) to discuss the gas, oil and power tariff and its impact on the industrial units.

Beside, this former President of KCCI Zubair Motiwala has met Federal Finance Minister Naveed Qamar to discuss the gas, oil sand power tariffs. He said that the Finance Minister had advised him to submit proposals as how to reduce utility tariffs.

He pointed out that the government had increased gas tariff for captive power plant by Rs 422.60 MMBTU, while for the IPP it was unchanged at Rs 251.55 MMBTU and for Water and Power Development Authority (Wapda) and Karachi Electric Supply Corporation (KESC), it was increased to Rs 329.55 MMBTU. He termed the recent increase in gas tariff as unjustified, adding that gas was an indigenous product of Pakistan, and urged to immediately withdraw increase in gas tariff. Business Recorder, 2008

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