Joblessness looms amidst Petrol Price Hike

Joblessness looms amidst Petrol Price Hike, says Business Leaders

In the wake of the recent fuel price hike, business leaders especially in Karachi have expressed grave concerns about a significant rise in petroleum prices imposed by the interim government. Business Leaders across Pakistan have warned of the potential closure of almost 50% of industrial units, leading to mass unemployment since rates of raw material, transportation, electricity, and inflation will affect everything. The severe struggle for industries due to recent Tariff Hikes

The severe struggle for industries due to recent Tariff Hikes

Pakistan’s industry which is already grappling with nearly Rs10 per unit power tariff hikes finds itself unable to manage additional increases of Rs17.50 and Rs20 per liter in petrol and diesel prices respectively. Business leaders state that recent price hikes would amplify the inflationary pressures which in turn would drive up the living and manufacturing costs of industry.

Inflationary Pressures

In the past 16 months, petrol prices have risen from Rs. 148 to now 290 plus, choking industries, exports, small and medium business owners, landowners, and agriculturists. The price surge will undoubtedly worsen the inflationary pressures for industries, small and medium business owners, and other sectors.

FPCCI’s Appeal for Solutions

Acting president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Mr. Suleman Chawla has urged the government for addressing issues related to oil cargo management, refining processes, and transactional procedures for Russian crude imports, stressing the importance of finding solutions, otherwise, he feels that it would severely damage the Pakistan business industries.

Read more about Another Petrol Bomb – Petrol price increased by Rs.18 & high-speed diesel by Rs.20/-

Global Market Uncertainty

It is also predicted that due to global economic slackness, the international oil market faces uncertainty, with demand for petroleum products projected to remain low. Moreover, due to recent price hikes domestic refinery demand for petroleum products is also expected to stay below 150,000 barrels per day for imported crude, keeping in view the national economic slowdown.

Government’s Role in Stability

Mr. Suleman Chawla requested the government to avoid further increases in petroleum prices and policy rates, especially petroleum and electricity tariffs. Furthermore, he also requested the government to inquire into the need to eliminate the manipulation of exchange rates to achieve economic stability.

Intensifying Consumer Hardships

Before April 10, 2022, the PDM government only stressed the inflation which was only 12% at the time caused due to the PTI government, but in recent times that 12% figures have reached 40% and returned to 30% in the past week. It appears that the interim government is also committed to not lessening the burden of the people of Pakistan. The recent fuel price hike as well as electricity price hikes have added severely to the challenges faced by consumers, further exacerbating their difficulties despite living a very subdued life.

Industrial Units at Risk

In such severe economic conditions, 50% of industrial units in Pakistan are already shut down stating unfavorable business opportunities and the remainder are struggling to survive under the weight of high energy tariffs, signaling leaving thousands of workers under hard

Appeal for Lower Costs

Business leaders across Pakistan have requested the government to lower petroleum and electricity prices, aiming to reduce production costs and support struggling industries.

Surging Fuel Prices and anticipated Unemployment

Following the Surging fuel prices, it is predicted by various business leaders that it would lead to a surge in unemployment and negatively impact vulnerable factions of society especially the lower class of Pakistan.

Impact on Transportation and Industries

A recent hike in petroleum prices would affect the industries foremost. High diesel costs translate to higher transportation expenses for goods, which in turn adversely affect industries heavily reliant on cargo shipping and freight services.

Addressing Immediate Challenges

Mr. Ehsan Malik, CEO of Pakistan Business Council (PBC) stated that challenges posed by inflation, petroleum price hikes as well as utility tariffs have long been an economic issue in Pakistan and no government has ever focused to eradicate the causes of the poor economy, thus same problems occur after every 3 to 4 years.

Sustainable Path to Growth

Mr. Ehsan Malik suggests a Pakistan should approach IMF once again for a five-to six-year International Monetary Fund program with progress-linked tranche releases, similar to the Special Investment Facilitation Council (SIFC) approach, which could pave the way for stability and economic growth if Pakistan government commits to revive the economy once and for all.

Short-Term Mandate Constraints

At present, the caretaker government’s short-term mandate stops any significant reforms or structural changes to the institution or long-term policy, limiting its ability to address challenges in the near future. The next government, whenever the elections are held, shall go for the suggested 5-to-6 years IMF Program immediately as it is sworn in.

Stabilization Measures

Business Leaders across Pakistan see the rupee to be below 270 to be at its true value, reducing the policy rate to 13%, imposing bans on luxury imports, alongside reducing industry taxes and expanding the tax net will cause stabilization in the market and improve sentiment for the government across Pakistan.

The distressing petroleum price hike raises anxieties of joblessness and industrial closure, prompting calls for swift measures to stabilize the economy and protect vulnerable factions of society.