FPCCI Panel Warns of Economic Devastation from Gas Arrears

LAHORE: The Businessmen Panel (BMP) of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has cautioned that levying substantial retrospective gas arrears on industries could severely harm Pakistan’s economy and its export sector.

Mian Anjum Nisar, former president of FPCCI and Chairman of BMP, has implored the Sui Northern Gas Pipelines Limited (SNGPL) and the government to immediately retract these unwarranted arrears, stating that they place an untenable burden on businesses already facing difficulties.

Nisar highlighted that manufacturers nationwide have been presented with unexpectedly high bills, incorporating nearly a decade’s worth of alleged adjustments. This comes when industries are already struggling with record energy expenses, declining demand, and constrained liquidity. He warned that such erratic actions could incapacitate both the textile and manufacturing sectors, thereby crippling the nation’s export capabilities.

“Industries are fundamental to Pakistan’s financial system; however, they are being pushed towards shutdowns through unreasonable policies. How can businesses be expected to remain viable when burdened with retrospective payments spanning several years, lacking both justification and reconciliation?” he questioned. Nisar added that the private sector is already reeling from excessive electricity costs, high interest rates, and inflationary pressures, with these retrospective gas arrears only exacerbating the situation.

The BMP leader pointed out that exporters and manufacturers have been voicing concerns about unsustainable energy costs for several months. Gas and electricity tariffs in Pakistan remain the highest in the region, rendering Pakistani products uncompetitive on the international stage. Nisar stated, “While countries like Bangladesh, India, and Vietnam are offering subsidies and assistance to their exporters, we are penalizing ours with the most expensive energy rates in the region, setting the stage for economic misfortune.”

He noted that instead of aiding industry, the unexpected issuance of these arrears bills has triggered considerable anxiety among businesses. Numerous FPCCI member companies have reported receiving bills amounting to hundreds of millions of rupees, accompanied by unrealistic payment deadlines, leaving them with the stark choice of ceasing operations or defaulting. “This will precipitate job losses, capital outflow, and a further decline in industrial activity,” he cautioned.

The BMP emphasized that the textile sector, responsible for over 60 percent of Pakistan’s total exports, is already nearing collapse due to elevated input costs, supply chain disruptions, and reduced orders. The enforcement of retrospective gas arrears could compel numerous mills to shut down permanently. Nisar commented, “Instead of fostering a supportive environment for growth, we are suffocating our primary source of foreign exchange.” He stressed the urgency for the government to recognize the seriousness of the situation, with Pakistan grappling with a significant economic crisis, diminished foreign reserves, and a growing trade deficit, the resolution of which lies in bolstering exports. “If industries fail, exports will decline even further, forcing Pakistan to rely on increased borrowing. This detrimental cycle will persist unless we revise our policies,” he stated.

Mian Anjum Nisar urged the government to engage with stakeholders to formulate a viable strategy that guarantees affordable energy for industries. He called for an immediate suspension of retrospective gas arrears, a reduction in electricity tariffs, and the implementation of regionally competitive energy pricing for exporters. “The government cannot expect industries to bear the cost of its inefficiencies. Billing retroactively for nearly a decade is merely an attempt to offset past mismanagement at the expense of businesses,” he asserted.

The BMP also highlighted that numerous small and medium enterprises (SMEs), which constitute a substantial portion of Pakistan’s industrial foundation, lack the capacity to withstand such financial shocks. Unlike larger corporations, SMEs do not possess the necessary cash flow or reserves to cover unjustified arrears. “Thousands of SMEs will be eliminated if these arrears are not rescinded, which will adversely affect exports and incite unemployment and social instability,” he warned.

Advocating for a nationwide dialogue, Anjum Nisar declared that it is imperative for the government to prioritize industrial recovery rather than adding to its burdens.

He emphasized that policymakers should view exporters as essential partners in progress, rather than as sources for revenue extraction. “The energy crisis, combined with inadequate policy decisions, has already led to a decrease in exports. Without immediate relief, Pakistan risks losing its global markets permanently,” he added. He reminded authorities that the textile and manufacturing sectors have been requesting long-term energy policies to ensure predictability and stability. Instead, these sectors face abrupt shocks like retrospective billing, which undermines investor confidence. “We require consistent policies, not reactive measures. Investors will be hesitant to invest in a country where regulations are subject to sudden changes and costs are applied retroactively,” he concluded.

The BMP reaffirmed its unwavering support for industries nationwide in their opposition to these unjustified arrears. It called on the government to withdraw the bills without delay and to focus on lowering the cost of conducting business, stabilizing the currency, and promoting exports. “This is not merely an industry issue; it is a national imperative. Without industries, there can be no jobs, no exports, and no economic stability.