Factories in Pakistan’s commercial capital have warned that excessive energy costs may force them to shut down production, dealing another blow to the country’s fragile economy.
According to an appeal published in local newspapers on Thursday by nine business groups, rising power costs make it impossible to maintain production for 40,000 firms in Karachi. The business groups lobbied the government for lower fuel prices in Karachi, one of the world’s most populous cities with a population of over 20 million people.
The global energy crisis is the latest issue facing Prime Minister Shehbaz Sharif’s government, which took office in April following a period of political turmoil. In the ten months ending in April, the country’s energy import costs more than doubled to $17 billion.
Separately, for the first time in 11 years, Karachi’s electricity utility, K-Electric Ltd., has warned that it may begin widespread power cuts, which might involve protracted rationing to industrial zones. Fuel prices are rising, and there are supply constraints, which are causing power generators to struggle.
According to Sadia Dada, a representative for K-Electric, “current conditions are seriously impeding KE’s ability to obtain fuel, resulting in a permanent reduction of power generation” that translates to as much as 10 hours of planned blackouts for some portions of the city. Customers are being urged to reduce their power consumption by 20% compared to last year’s levels.
Pakistan is attempting to clinch a long-term liquefied natural gas contract, which would help the country lessen its reliance on the pricey spot market and alleviate shortages. Prime Minister Sharif’s energy adviser, Shahid Khaqan Abbasi, told Bloomberg News that limiting power saves the country $125 million an hour.