Government should give subsidy to export oriented industry, demands Apmta-South.
ISLAMABAD - Sui Southern Gas Company Limited has proposed a hike of up to 628 per cent in gas tariff for independent power producers, industrial and commercial consumers, saying that the move will protect domestic, tandoor and fertiliser sectors from gas tariff hike.
However, the move was strongly opposed by All Pakistan Textile Mills Association (APTMA)-South, saying that the already increased gas tariff is unsustainable, detrimental to the national security of Pakistan, primary cause for closure of industries, joblessness, civil and social chaos, strangulation of export oriented industry and decline of forex reserves. The government should rather give subsidy to the export oriented industry than further increasing their tariff, said APTMA.
Notably, in its petitions submitted with Ogra, Sui Northern Gas Pipelines Limited (SNGPL) has sought a hike of 3.66 per cent, while Sui Southern has asked for 53.47 per cent increase in the average prescribed prices of gas for FY2024-25. In its petition, SSGCL has proposed that upward adjustment of Rs 3073.91 per MMBTU for FY2024-25 has been re-worked at Rs6594 24 per mmbtu with the consideration that effect of price adjustment should not be passed on to domestic, special commercial (roti tandoors) customers and feedstock of fertilizer industry. However, OGRA & GOP are authorised to rework these numbers according to their policies. The SSGL has proposed a hike of Rs6,594.24 per mmbtu for IPPs, existing power stations, industrial consumers, captive power, Pakistan Steel, and ICE factories. If approved by Ogra, the gas tariff for IPPs, existing power stations will go up by 628 per cent from the existing Rs 1050 per mmbtu to Rs 7,644.24 per mmbtu, and for captive power, industrial consumers and Pakistan Steel it will go up by 412 per cent.
The tariff of industrial consumers and Pakistan Steel will go up to Rs8,196.16 per mmbtu from the existing Rs1601.92 per mmbtu, while for captive power it will go up to Rs8643.21 per mmbut from the existing Rs 2048.96 per mmbtu. For commercial sector and ice factories it will be increased by 227 per cent from the existing Rs 2905.81 per mmbtu to Rs 9500.05 per mmbtu. A letter written to Ogra, by Chairman APTMA South, Zahid Mazhar, said that the proposed hike of 412 per cent in gas tariff, from Rs 1696 per mmbtu to Rs. 8,643 ($31.12) per mmbtu, by SSGCL for captive power and industrial sector is unsustainable and requested Ogra to reject the Sui Southern Gas Pipeline request for tariff hike.
APTMA-South further said that SSGCL has also reworked cross subsidy of other inefficient sectors and passed on to the burden on industry by suggesting Rs. 8,196 (USD 29.51) per mmbtu for general industry and Rs. 8,643 (USD 31.12) per mmbtu for captive powers. This is discrimination and serious economic distortion against any good governance norms and OGRA Ordinance 2002. SSGCL should have distributed over all the sectors, as a corporate business body and not as a political party.
SSGCL has included shortfalls from FRR of 2021-22 & 2022-23, which is completely out of context and needs to be removed as the Authority has already made decisions for these respective years. SSGCL may separately move a petition with options and solutions, such as Quantitative Easing (QE), said APTMA. APTMA requested OGRA to immediately issue directives for reducing UFG on deceleration basis to internationally accepted practices. Gas loss (UFG) of 38 Billion Cubic Feet (12.10 %) is horrendous. The burden of UFG eventually lands in the bills of the industrial Sector, especially the export oriented industries. We suggest that the SSGCL shareholders and GOP take the burden of the UFG. APTMA has requested OGRA to not consider SSGCL petition in its present form, reject it ab-initio and ask SSGCL to rework it.
