Rising energy price may dent cement business in Pakistan

Pakistan's government increased the fuel price in the country on 1 August 2023. Two influential trade organisations, the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and the Korangi Association of Trade and Industry (KATI), strongly opposed the recent increase in petrol prices, calling for its immediate withdrawal. An increase in transport costs would spike the cement industry's dispatches and raw material transportation costs. 

FPCCI President, Irfan Iqbal Sheikh, has strongly condemned the massive hike in petrol products by PKR19.95/l (US$0.069l) to make it PKR272.95/l, and high-speed diesel by PKR19.90/l to PKR273.40/l now. It will further fuel the inflationary pressures, resulting in a further increase in the cost of living and doing business, including stakeholders of the cement industry – which is already the highest in the entire region, he added.  

Mr Iqbal Sheikh reminded that just last week, the government announced a PKR7.50/kWh rise in electricity prices, despite FPCCI’s repeated demands that electricity and petro prices be kept stable, if not subsidised, or reduced for the export-oriented industry. He questioned how the existing export orders could be met profitably after the double blow of electricity and petrol price hikes.  

KATI’s President, Faraz-ur-Rehman, expressed concern over the burden this decision would place on the people and emphasised the need for the government to reduce excessive expenses instead. In a press statement, he highlighted the challenges industries face amidst record-high production costs and rampant inflation. He criticised the government for implementing a sudden increase of INR19 in petrol prices, which would not only impact industrialists but also exert severe economic pressure on the general public.

He also underscored the importance of taking effective measures to control production costs and inflation at the government level. He accused the government of affecting the public's budget by raising petroleum levies and taxes, following the terms the International Monetary Fund (IMF) set.

Faraz-ur-Rehman emphasised that the recent price hike would escalate inflation further, leading to financial strain on the working class due to increased public transport fares, higher electricity and gas bills, and rising commodity prices. He referred to the government's move as detrimental, potentially damaging its electoral prospects.