ISLAMABAD: Pakistan’s major steel producers have warned that skyrocketing electricity and petrol prices are pushing the steel industry towards collapse, with the industry facing survival problems due to the skyrocketing cost. electricity prices rise steel industry faces survival problems millions of jobs at risk.
Secretary General Wajid Bukhari, representing the steel industry, expressed deep concern over the huge increase in input costs, which he sees as cheating on the sector. He said that the recent increase in electricity and petrol prices would not only increase the cost of production but also push the industry to the brink of closure, jeopardizing the livelihood of millions of people.
He said that the steel industry was already facing problems due to inflation, rising finance charges and continuous increase in fuel prices. A massive currency devaluation has deepened the industry’s crisis and now the government’s recent hike in electricity prices has added fuel to the fire. It is unbearable.
He said that electricity prices have increased by more than 78% during the last year and the price per unit was Rs. 28 in June 2022 which has reached to about Rs. 50 in July 2023 The recent increase in tariff by Rs 7.5 per unit will adversely affect the steel industry which is heavily dependent on electricity.
As a major consumer of electricity, the steel industry will bear the brunt of rapidly rising electricity costs, which account for nearly 50 percent of the industry’s total production costs. Increase in power rates will further increase the cost of production leading to an inevitable increase in the prices of steel products.
Wajid Bukhari warned that prices of steel products are expected to increase by an additional Rs 8,000 to 10,000 per tonne due to higher electricity bills, while the effects of finance charges, transportation costs, and currency devaluation overall. But the prices of steel products can increase by 15 thousand to 18 thousand rupees per ton.
The steel sector has highlighted a worrying trend, where the steep rise in petrol and electricity prices continues unabated. Energy tariffs in Pakistan are now the highest in the world, adversely affecting the domestic steel industry. Comparatively, electricity prices in Pakistan are about 55% higher than Vietnam, 45% higher than Bangladesh, 41% higher than China, 29% higher than Ukraine and 21% higher than India.
Wajid Bukhari said that expensive energy tariffs in Pakistan are making the steel industry uncompetitive and inhibiting its growth potential, the discrepancy in energy costs affects the ability to compete internationally and steel. There is a serious threat to the future of the sector.
In light of these challenges, major steel producers have demanded the government to address these concerns and find an immediate solution. They say that if this is not done, dangerous consequences may arise which will hamper the development of the country.