Industrialists Demand Reduction in Oil Prices
The recent hike in the prices of petroleum products, including diesel and petrol, has sparked outrage among industrialists in Pakistan. These price increases are viewed by many as contradictory to the country’s newly launched economic transformation plan, “Uraan Pakistan,” announced by Prime Minister Shehbaz Sharif. Industrial leaders have called on the Prime Minister to take swift action, urging a reduction in the rates to alleviate the burden on the masses and businesses.
Impact of Rising Petroleum Prices on Industrial Growth
Rising Diesel and Petrol Prices: A Major Concern for Industries
According to the latest notification by the Ministry of Finance, the Oil and Gas Regulatory Authority (OGRA) has revised the prices of petroleum products in line with fluctuations in the international market. As per the new price structure, the cost of high-speed diesel (HSD) has been increased by Rs2.96 per litre, from Rs255.38 to Rs258.34 per litre. Additionally, the price of motor spirit (MS), commonly known as petrol, has also been raised by Rs0.56 per litre, taking it from Rs252.10 to Rs252.66 per litre.
Contradiction Between Government Plans and Price Hike
While the government introduced the “Uraan Pakistan” initiative, which aims to address economic issues, promote sustainable export-led growth, and support industries in overcoming challenges, industrialists argue that this new price hike runs contrary to the government’s stated economic goals. Ahmed Azeem Alvi, the President of the SITE Association of Industry (SAI), expressed concerns that the rise in fuel prices directly contradicts the government’s vision for national economic growth.
The increase in fuel prices within 24 hours of the announcement of the “Uraan Pakistan” plan shows a disconnect between the government’s economic policies and actions taken by various institutions, Alvi said. Such contradictions, according to industrialists, have historically undermined Pakistan’s economic progress.
“The PM must take action against the rise in petroleum product prices and investigate those responsible for increasing rates,” Alvi stated. He emphasized that after the announcement of the economic transformation plan, the government should have maintained previous fuel prices to support its growth objectives.
Petroleum Price Hike: A Strain on Small and Medium Enterprises (SMEs)
Shaikh Muhammad Tehseen, President of the Federal B Area Association of Trade and Industry (FBATI), also criticized the government’s decision to raise petroleum prices. He pointed out that instead of increasing the cost of petroleum products, the government should reduce taxes on these products to ease the burden on both the public and businesses. According to Tehseen, the hike will lead to higher inflation, adversely affecting the cost of living and production.
Small and medium-sized enterprises (SMEs), which are already struggling with multiple challenges, will face significant difficulties due to rising operational costs. For such businesses, even small increases in fuel prices have a ripple effect, resulting in higher transportation and production costs.
Government’s Role in Relieving the Pressure on Industries
Tehseen further urged the government to reduce fuel prices as a means of passing on relief to businesses across the country. A consistent rise in utility prices, including gas and electricity, in the past year has already placed significant financial pressure on both businesses and consumers.
Muhammad Farooq Shaikhani, former President of the Hyderabad Chamber of Small Traders and Small Industry (HCSTSI), echoed similar sentiments. He criticized the government for imposing an unjustified increase in petrol and diesel prices, calling it an exploitative measure that would only exacerbate inflation and reduce the purchasing power of the general public.
Key Concerns of the Industrialists
A Growing Economic Burden
The increase in petroleum prices is seen as part of a broader trend of rising costs that continue to strain Pakistan’s economy. The cumulative effect of rising fuel prices, coupled with the increase in utility costs, is putting immense pressure on businesses, especially small and medium-sized enterprises.
These price hikes lead to higher production costs, which in turn affect the overall economy, resulting in inflation and a reduced standard of living. The ripple effect of these price hikes extends far beyond the business community to everyday consumers, making life even harder for the average citizen.
Striking a Balance Between Economic Plans and Policy Actions
Industrial leaders have questioned the government’s ability to implement its economic transformation plans while simultaneously raising petroleum prices. The “Uraan Pakistan” program, which promises to revitalize industries, boost exports, and create jobs, is seen as a critical step toward economic growth. However, the price increase in petroleum products undermines the plan’s objectives, particularly in terms of maintaining a stable and affordable business environment.
The Strain on Local Businesses
For many local businesses, the rising cost of fuel is a major challenge. The increase in petrol and diesel prices raises transportation and logistics costs, which impacts industries that rely on the movement of goods. Small businesses, in particular, face difficulty absorbing these additional costs, which could lead to closures or layoffs if the situation does not improve.
Shaikhani believes that these measures are counterproductive and suggested that the government should explore alternatives to balance the budget, such as reducing unnecessary taxes, rather than increasing the burden on struggling industries and consumers.
What Needs to be Done?
Call for Government Intervention
Given the adverse impact of the recent price hikes, industrialists are calling for immediate intervention from the government. They demand a rollback of the recent price increases and a focus on policies that alleviate the burden on industries and consumers. One suggested course of action is for the government to reduce taxes on petroleum products, as this would directly result in lower prices for consumers and businesses alike.
Promoting Sustainable Economic Growth
The industrial sector is calling for policies that prioritize sustainable economic growth and ease the cost of doing business. With rising production costs, inflation, and uncertainty in the market, businesses need stable and predictable policy measures to navigate these challenges effectively. The government must provide more clarity and direction to ensure the success of economic transformation plans like “Uraan Pakistan.”
Ensuring a Stable Business Environment
Creating a stable and predictable business environment is crucial to attracting investments and supporting industries. By reducing the prices of essential goods like fuel, the government can make the business environment more conducive to growth and development. This would foster greater economic stability and help industries thrive, contributing to job creation and boosting exports.
FAQs on the Recent Petroleum Price Hike and Economic Impact
What was the recent increase in fuel prices in Pakistan?
The price of high-speed diesel (HSD) was increased by Rs2.96 per litre, taking it from Rs255.38 to Rs258.34 per litre. The price of petrol (motor spirit, MS) was raised by Rs0.56 per litre, from Rs252.10 to Rs252.66 per litre.
Why are industrialists opposed to the price hike?
Industrialists argue that the price increase contradicts the government’s recently announced economic transformation plan, “Uraan Pakistan,” which aims to boost economic growth and support industries. They believe the price hike undermines the goals of this initiative.
What impact will the price hike have on small businesses?
The price hike will increase transportation and production costs, particularly affecting small and medium-sized businesses that struggle with higher operational costs. This could lead to increased inflation and a higher cost of living, impacting both businesses and consumers.
What actions do industrialists want from the government?
Industrialists are urging the government to reduce fuel prices by cutting taxes on petroleum products. They also demand a rollback of the recent price increases to alleviate the financial burden on businesses and the public.
How does the price hike affect the overall economy?
The price hike contributes to inflation, raising the cost of living and increasing production costs. This creates economic instability and places additional pressure on both businesses and consumers, further hindering Pakistan’s economic growth.
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