ISLAMABAD: All industrial sectors in Pakistan face serious challenges owing to a significant surge in energy prices, WealthPK reports.
The increase in energy prices leads to a rise in input costs, resulting in a decrease in demand for products. The prices of energy products in the international market have increased and Pakistan is heavily dependent on imported petroleum products. The depreciation of the Pakistani rupee also causes an increase in the energy product prices in the country.
Muhammad Riaz Khattak, senior vice-president of the Pakistan Businesses Forum (PBF), told WealthPK that the government should announce an economic emergency as the country is facing severe challenges with unprecedented depreciation of the rupee against the dollar. The government should consult all stakeholders to find a solution to the prevalent economic crisis.
The textile industry is the key sector that contributed around three-fifth to the country’s total exports of $17.62 billion during the 11 months of the financial year 2021-22, showing an increase of 28.26 percent as compared to $13.74 billion in the same period of the fiscal year 2020-21.
All Pakistan Textile Mills Association (APTMA) has already warned the government of the loss of $1 billion in textile exports due to the suspension of energy.
The government failed to secure the spot purchasing of liquified natural gas (LNG) for the month of July because of low foreign reserves and higher prices of the commodity in the international market. The state-owned Pakistan LNG Limited (PLL) has received only one bid in response to its latest spot tender as other suppliers shied away amid a tight market and elevated Asian spot LNG prices, which stood at $37.246/MMBtu on June 23.
Moreover, PLL is seeking 10 spot cargos, two for July, five for August and three for September. PLL issued tenders on July 1, which were opened on July 7. It is the fourth time roughly in a month that Pakistan has failed to complete an LNG purchase tender.
Earlier, PLL had issued tenders three times but it did not get any bid in the first two attempts. In the third attempt, it got only one bid at a price of $39.8 per MMBTU, which the government decided not to purchase.
Due to higher current account deficits and a rapid increase in imports, the reserves have been dwindling. The increasing foreign debt repayments and decreasing inflow of dollars have further deteriorated the situation.
-INP
