AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
KARACHI: Mian Zahid Hussain, a prominent figure in Pakistan’s business community, expressed grave concerns on Wednesday over the government’s current energy and taxation policies. He warned that these measures are driving the nation’s industries, particularly the textile sector, toward a potential economic collapse.
The textile industry, a cornerstone of Pakistan’s economy, is reportedly struggling to remain competitive on the global stage due to soaring energy costs. Rather than fostering growth, these policies are impeding progress and risking the survival of key industries.
Hussain pointed to the adverse impact of petroleum and climate support levies on furnace oil. These taxes have increased the total tax share to approximately 60% of its price, posing a severe challenge for businesses.
Addressing the business community, Hussain recalled that during previous energy crises, industries relied on captive generation, producing their own electricity from gas or furnace oil. However, government-imposed Independent Power Producer (IPP) projects have forced industries to purchase costly electricity instead.
With gas prices on the rise, industries have reverted to using furnace oil, which is now so expensive that maintaining production has become nearly unfeasible. Industries reliant on continuous electricity or cooling systems are facing significant difficulties, with alternative energy sources proving costly and challenging to implement.
Hussain also noted the crisis confronting local refineries, which are grappling with decreased demand for furnace oil. The resulting surplus poses export challenges, and reduced refinery production could disrupt domestic petrol and diesel supplies, leading to potential shortages and price increases.
Furthermore, gas companies are in turmoil as many industries have ceased using gas, while the government persists in importing expensive LNG. Domestic gas production is reportedly being limited to accommodate these imports.
Hussain emphasized that the escalating circular debt is hampering the energy sector and industrial productivity. Unstable policies have eroded investor confidence, and aggressive tax measures are causing business unrest. He criticized the government’s lack of energy reforms and stakeholder engagement, warning that without a coherent strategy, ad hoc decisions could necessitate repeated bailouts.
He asserted that not all detrimental policies can be attributed to the IMF, as several have been initiated independently by the government. Hussain proposed that a concerted effort to expand the economy from $412 billion to $600 billion within a year could offer hope.
Such growth could generate jobs, boost tax revenues, and revive industry without burdening businesses. He questioned the wisdom of pursuing $51 billion in tax revenue at the potential cost of the country’s long-term economic health.