KARACHI - TRANSPORTERS GO ON STIKE DEMANDING RATE

C O N F I D E N T I A L SECTION 01 OF 02 KARACHI 000451

SIPDIS

E.O. 12958: DECL: 07/23/2018
TAGS: SOCI ECON ENGY PGOV PK
SUBJECT: KARACHI - TRANSPORTERS GO ON STIKE DEMANDING RATE
HIKE

REF: Islamabad 2470

Classified by Kay Anske, Consul General, 1.4 b and d.


1. (C) Summary: Members of KarachiQs mass transportation
union, the Karachi Transport Ittahad (KTI),went on strike
on July 22 to demand provincial government approval of a
fare increase to compensate for a sharp increase in fuel
costs. The strike ended the same day after meetings
between KTI representatives and the Minister of
Transportation. Both sides agreed to a maximum two rupees
(around US 3 cents) increase. This agreement must approved
by Sindh Chief Minister Syed Qaim Ali Shah by July 26 or
the union could strike again. Industry associations
estimate that the one-day shutdown cost businesses in the
cityQs two main industrial parks around 1.64 billion rupees
(approx USD 23.4 million) as 40 Q 45 percent of
manufacturers remained closed due to employeesQ inability
to find transportation to work. End summary.

Transporters Go On Strike
--------------


2. (U) July 23 media reports described the impact of a
July 22 transport strike by the Karachi Transport Ittahad
(KTI),a union of bus, mini-van and coach operators. The
strike was called to demand that Sindh government
authorities accept the unionQs demands for a rate increase
to compensate transporters for increased fuel prices.
(Note: On July 20, the GOP announced an immediate 17
percent increase in diesel prices, bringing the cost per
liter to 64.64 rupees (around US 92 cents). The GOP also
raised gasoline prices 14 percent, with the new price per
liter set at 86.66 rupees (approx USD 1.24). The move was
an attempt to stem a hemorrhage of foreign reserves
expended to subsidize rising fuel import costs (see
reftel). End note.)


3. (U) The reports described sparse traffic on normally
busy thoroughfares and price-gouging by those transporters
not covered by the strike, such as rickshaws and taxis.
KTI representatives told the media they agreed to end the
strike effective July 23 after Sindh Ministry of
Transportation officials agreed to continue discussions
about a rate increase.

Significant Economic Impact
--------------


4. (U) In a telcon with EconOff on July 24, the Secretary
of KarachiQs Sindh Industrial Trading Estate (SITE)
Association, confirmed that the information in a July 23
Business Recorder article on losses sustained by industry
during the July 22 transporters strike was accurate. The
newspaper reported that businesses in SITE and at the
Korangi industrial area reported total losses of 1.64
billion rupees (approx USD 23.4 million). The losses
included 1.4 billion rupees in lost production (approx USD
20 million),150 million rupees (approx USD 2.1 million),
and foregone revenues of 107 million (USD 1.5 million).
The article also cited industry closure rates between 40 Q
45percent. Many employees, who rely on public
transportation, were unable to go to work on the day of the
strike.


5. (U) Korangi Association of Trade and Industry Vice
Chairman Syed Johar Ali Qandhari told EconOff that he was
not sure of the exact losses as reported in the press, but
believed the they were high. Especially hard hit were
industries that relied on exports. He did think the
reported percentage of business shutdowns was accurate.
However, Majyd Aziz, a textile manufacturer said he thought
the numbers were exaggerated and questioned the methodology
used to determine losses on that day.

KTI Claims Terms Met
--------------


6. (C) KTI President Irshad Hussain Shah Bukhari told
EconOff on July 23 that a union delegation met with Sindh
Minister of Transportation Akhtar Hussain Jadoon on July 22
over the fare increase request. According to him, the
union asked for a four rupee increase (about 5.7 cents).


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7. (C) The Minister opened negotiations during a visit to
KTI offices to request an end to the strike. Talks
continued later in the day at the MinisterQs office and
resumed on July 23. Bukhari said the provincial government
agreed at that meeting to allow KTI members to increase
fares by two rupees (around US 3 cents) effective July 26.
He added that if the provincial government failed to issue
the enabling decree for the rate increase by that date, the
union's executive committee would meet two days later to
plot a future course. Transport unions in Islamabad and
Lahore have threatened to go on strike if their demands for
a rate increase are not met by July 26.

Sindh Ministry of Transportation Agrees To Rate Hike
-------------- --------------


8. (C) Sindh Ministry of Transportation Public Relations
officer Abdul Mehmon confirmed that a deal had been made
during a July 24 conversation with EconOff. According to
him, the July 23 agreement allows KTI to increase fares up
to two rupees depending on the distance traveled. He added
that the agreement will be sent to Sindh Chief Minister
Syed Qaim Ali Shah for final approval who has until July 26
to approve or the union could go back on strike.


9. (C) Comment: A transporterQs strike in Karachi appears
to have been averted for the moment. However, an increase
in mass transit costs will contribute to the cityQs already
accelerating inflation rate, further fueling discontent in
a city suffering from increased food costs, electricity
shortages and capital market turmoil. End comment.

ANSKE