Al-Jaghbair: Increasing fuel and liquefied gas prices weakens the competitiveness of the national industry

10-Feb-2020

Almaqar- Industrialists denounced the recent sudden government decision to raise fuel oil prices by 14 percent and liquefied gas by 16 percent without warning or even a prior announcement.

A number of industrialists considered that raising the prices of liquefied gas in particular would harm the industries that use it, especially since the price of tons increased by 100 dinars, while some industries enter liquefied gas in them by 20 percent of production capacity.

And some industrialists announced the suspension of some production lines to search for new alternatives after the government decided to take the sudden lift.

Industrialists said that the decision will not be limited to industries only, but will go beyond the reach of the companies that provide the gas service specifically, as these companies have invested with the industrialists in the transition to the use of gas instead of diesel.

The head of the Jordan Chamber of Industry, Engineer Fathi Al-Jaghbir, denounced the raising of fuel prices on the industry, despite the decrease in international prices, and the government's approval in advance of linking local prices with international prices, calling for the need to reconsider the decision to increase the prices of industrial fuel.

Al-Jaghbir said that "fuel and fuel are considered an essential factor affecting the costs of industrial production, especially in some sub-sectors on top of them: construction industries, mining industries, and plastic industries, which means that the increase in prices reflects negatively on increasing costs and weak competition locally and abroad."

Al-Jaghbir indicated that the industrial sector pays approximately 400 million dinars annually as a fuel and fuel bill, and constitutes about 37% of production costs in the event that the raw materials are excluded.

"The raising of fuel oil prices is a severe blow to the sector that will further weaken the competitiveness of the sector within the domestic market, except for its effect on the housing sector in increasing prices," said Alaa Abu Soufa, representative of the construction industries sector in the Jordan Chamber of Industry.

Abu Soufa warned against the disappearance of vital industrial sectors in the Kingdom, such as the iron and cement industry, in the event that fuel oil prices continue to rise during the coming period, stressing the importance of stimulating and developing the national industry, which is the backbone of the national economy.

Abu Sufa called on the government to reduce fuel oil prices on the industrial sector to ensure the continuity of the construction industries sector, especially cement and iron, which employs more than 5 thousand workers in light of its heavy dependence on fuel and electricity, where it constitutes 40% of the production costs.

It is noteworthy that the total number of construction industries in the Kingdom is estimated at 2813 establishments, while it constitutes 3.3% of the gross domestic product, 53% of the volume of local consumption and 3% of the total national exports, while it employs about 18 thousand workers.

The owner of Tiba Metal Industries Company, Abdullah Al-Shawabkeh, said that energy prices have become a major challenge for the industrial sector, especially iron industries, which rely heavily on energy in production processes.

Al-Shawabkeh stressed that the rise in fuel oil prices in the current month's price will have negative effects on the industry through increasing costs and weak product competitiveness, domestically and abroad.

It is clear that Al-Shawabkeh that the iron and metal industry is at risk, we produce high production costs, pointing to the closure of more than 50% of the factories operating in the Kingdom in the field of iron manufacturing, as there are currently 6 out of 13 factories that were working in this sector.

He said that the industrial sector under the policy of commercial openness is no longer able to compete in light of entering imported products at prices and production costs that are less than manufacturing them locally.

Al-Shawabkeh stressed the need to find quick solutions that contribute to saving the sector through lowering energy prices and activating the law of protecting national production by imposing protection fees on imported products that are manufactured locally similar to what is applied in many countries.

The Director General of the Amman Chamber of Industry, Dr. Nael Al-Hussami, emphasized that energy in the industrial sector in all its forms (electricity, fuel oil, “industrial fuel”, diesel and liquefied gas) is an important productive input and cannot be rationed, rationalized, or dispensed with, so that the more energy consumption in the industry It means an increase in production.

Al-Hussami said that the industrial sector is the third consumer sector for energy after the transportation and domestic sectors, as the industrial sector consumes about 14% of the final energy consumed directly, except for indirect consumption that results from transportation or storage operations, and therefore the industrial sector is the third largest sector Primary energy consumer.

Al-Hussami indicated that the industrial sector consumes approximately 150,000 tons of oil equivalent of “industrial fuel” annually (92% of locally produced fuel oil), which is 37% of the total oil derivatives used in industrial production or 16% of the total energy. Consumed in the industrial sector, which shows the importance of fuel oil in the process of industrial production and its impact on pricing mechanisms for industrial products, especially for facilities based on heavy and major industries.

Al-Husami and the fuel oil prices for the industrial sector in the number of countries, especially those that are important trading partners for Jordan, do not exceed 120 dollars per ton compared to an unstable price between 440-550 dollars per ton in Jordan, which creates an unfair competitive environment in the local market and does not help Jordanian industrialists In competition in international markets.









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