Unpredictable fuel pricing mechanism hurting industry: SAI

KARACHI: Abdul Rehman Fudda, head of the SITE Association of Industry Karachi, has raised alarms about a mounting crisis within Pakistan’s industrial sector and export economy. The source of this turmoil, Fudda maintains, is the government’s policy of daily or semi-daily changes in petroleum prices, which is driving up transportation costs, disrupting factory inputs, and compromising the nation’s standing on the global stage.

He emphasized that such erratic fuel price adjustments have ushered in an era of unprecedented uncertainty for businesses and are pushing the industrial supply chain towards collapse. Fudda warned that the escalating freight charges are not only inflating the cost of delivering raw materials to factories but also making it increasingly pricey to ship export shipments to ports.

He bluntly stated, “The government is putting industry and exports at grave risk through an unpredictable fuel pricing mechanism.” “The forewarnings we made about the fallout have now become glaringly evident,” he remarked. Fudda called on the government to promptly abandon the daily pricing policy, slash taxes on petroleum products, and revise fuel prices not less than once every 15 days.

He underscored that a stable and predictable pricing system is crucial for effective production planning, procurement, shipment scheduling, and the very survival of export-dependent industries. Fudda recalled that when this policy was rolled out, industrialists had warned the government of severe repercussions for factories, especially those focused on exports.

Instead of ameliorating the situation, he said, the policy has ignited inflation, escalated operating expenses, and eroded business confidence. He criticized the government for not following through on its agreement with transporters to extend the fuel price revision period to two weeks. Despite the passage of 10 days, no tangible action had been taken, he lamented.

The SAI chief also accused the government of raising dealers’ margins, while oil marketing companies are seeking higher margins as well. He urged the government to prioritize comprehensive relief by reducing taxes on petroleum products rather than extending benefits to specific sectors or groups, arguing that this would offer direct respite to industry, businesses, and consumers alike.