Business leaders warn of ‘very tough’ days ahead after third diesel shock

KARACHI: The business community on Thursday feared very tough days ahead for consumers, warning of a sharp increase in the prices of food items due to the unprecedented increase in diesel rates in the last 20 days.

They said the real impact of the diesel price hike, which went from Rs144.15 per litre on May 16 to the current Rs263.31, would be visible in the next four to eight weeks in the Consumer Price Index (CPI).

Shabbir Hassan Mansha, Acting President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said the increase in the petrol price by Rs24.03 per litre and Rs59.16 per litre in diesel would crush the masses. The government has raised petrol prices by Rs84 per litre and diesel prices by Rs144 per litre in the last 20 days.

He said there is no way the transporters can absorb the massive hike in diesel prices, adding that the government must come forward to rescue the general public.

He pointed out that the grapevine is that the government is also mulling the proposal to re-impose the Petroleum Development Levy (PDL), and the business community is not sure where this unpredictable, aggressive, and anti-business upward price spiral would stop.

Mr Mansha also expressed his profound concerns over the massive electricity tariff hike of Rs7.91 per kWh, resulting in a Rs24.8 per kWh base tariff for FY23, which was Rs16.91 per kWh during FY22, which would push up the cost of doing business.

He said any further rise in petroleum prices, power and gas rates would make businesses unsustainable and unviable, urging the government to start a consultative process with the business community to work out some sort of operational contingency under the prevailing cost of doing business crisis.

President Site Association of Industry in Karachi Abdul Rasheed urged Prime Minister Shahbaz Sharif to withdraw the hike in POL prices and said an alternative solution must be found to cover the country’s deficit.

He said the government always cares for the International Monetary Fund instead of taking care of the people who finally face food inflation. Besides, a hike in diesel rates would significantly raise the production costs, thus adversely affecting exports, which were already under pressure owing to shortages of electricity, gas, and excessive tariffs.

He feared a suspension in production activities in case the petroleum prices are not reversed, which would also lead to an increase in unemployment and a decrease in exports.

President Korangi Association of Trade and Industry (KATI), Salman Aslam said the massive hike in petroleum rates is putting financial and mental stress on the poor besides soaring production costs, which may cause joblessness in case of industrial shutdown.

He said labour class in under huge stress due to increase in transportation charges as majority of them travel in public transport. Soaring energy bills are further multiplying their woes.

KATI chief urged the government to immediately start project of renewable energy resources as their completion required long time to become operational.