THE recent petrol shortage in most parts of the country has adversely shaken business confidence, forcing businesspeople to question the government’s ability to effectively tackle the economic challenges.

“The business confidence in the Nawaz Sharif government’s finance managers is at its lowest level ever since the PML-N returned to power,” said a Lahore-based businessman believed to be close to the top leadership of the ruling party.

“Letting the [petrol] crisis explode like this could have been an error of judgment. But delaying action to deal with the shortage and managing the situation reflects poorly on the capability of the prime minister’s finance-management team to safely steer the country out of the persisting economic chaos,” he concluded.

The business confidence peaked when the PML-N, led by Prime Minister Nawaz Sharif, won a clear majority in the 2013 elections and paid off the power sector’s unpaid bills of Rs480bn to improve electricity supply.

Most businesspeople were confident that the third PML-N government had the capacity and experience to remove constraints to economic growth. However, that seems to be a long time ago.

“It was in the hope of a better future that the people and the business community silently accepted the government’s decision to double electricity prices and raise the gas rate. The events of the last one year have underscored the fact that we were wrong and our expectations totally misplaced,” said a former president of the Lahore Chamber of Commerce and Industry who did not want to give his name.


“The gap between the government and the business community is widening,” notes Shahid Zia, a financial analyst with a long experience of capital markets


He said the present government is as much incompetent as its predecessor, even if not more. “The resurgence of the circular debt in the power sector to its old level of Rs500bn, unscheduled blackouts and gas shortages in spite of the hefty increase in the energy prices and the recent fuel shortage for both transport and power plants is but a sign of the government’s incompetence,” he insisted.

“What message was [Finance Minister Ishaq] Dar was giving to Japanese investors when the media was broadcasting images of long queues outside petrol stations in major cities? You believe his words meant anything to the Japanese investors, because I don’t.”

He said everyone was aware that the government, which came to power on the promise of resolving the energy crisis, had completely failed to improve supplies, control power theft and losses, and attract local or foreign investment in new electricity generation.

“So how is anyone going to listen to the prime minister and his colleagues when they tell us that the economy is on track and recovering?” he wondered.

Frustrated by rolling blackouts and gas shortage in Punjab, many businessmen agree that the petrol crisis was the ‘last straw on the camel’s back’. “At a time when we thought tumbling global oil prices will help us overcome our energy problems and boost growth, we had this fuel shortage bringing the economy to a halt,” contended a former FPCCI official who also spoke on the condition of anonymity.


Most businesspeople were confident that the third PML-N government had the capacity and experience to remove constraints to economic growth. However, that seems to be a long time ago


“The petrol shortage and the ministers’ lazy response to it have hit business confidence more than the political uncertainty generated by the months-long sit-in of Imran Khan’s PTI in Islamabad and the poor security conditions across the country. It will take a long time to reassure the investors that we have a competent government in Islamabad,” he insisted.

Market analysts say investor confidence had been consistently dwindling in the ability of the government’s present finance-management team and the prime minister’s cabal of ministers to deliver even before the fuel shortages in Punjab and elsewhere in the country struck this month.

“The problem with this government and its finance managers is that they do not trust anyone. They consider it beneath their status to invite and consult industry leaders, share with them their [economic] recovery plans and involve them in the policymaking process. The gap between the government and the business community is widening,” noted Shahid Zia, a financial analyst with a long experience of capital markets.

The last business confidence survey by the Overseas Investors Chamber of Commerce and Industry, a representative body of multinational companies operating in Pakistan, last November had shown that the confidence of its member-firms had declined consistently and significantly since March.

Business confidence for the next six months also remained largely negative. The index had further underlined that the investment appetite of OICCI members was declining mainly because of energy shortage, security concerns, inconsistent government policies and high cost of financing.

An OICCI official had noted that though business confidence remained positive, the positivity was teetering on the borderline and posing a ‘serious challenge’ to federal and provincial authorities to focus on good governance and create an enabling business environment.

“Pakistan has enormous potential to attract investment. However, for that to happen, the government is required to effectively handle the challenges facing the economy and prove that it is equal to the job that the people have given it. So far, it has shown only signs of incompetence,” concluded Zia.

Published in Dawn, Economic & Business, January 26th , 2015

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