KCCI, seven industrial zones, trade bodies appeal to govt to reduce gas hike in tariff  

By Syed Wahaj Ahmed

KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) with all seven industrial town associations and value-added textile associations have fervently appealed to the government to bring down gas tariff to Rs1,350 per mmBtu which has been determined as 100 per cent cost of gas by the Oil and Gas Regulatory Authority (OGRA) and the industries were ready to pay the same but not the subsidies.

Addressing a press conference here on Tuesday, chaired by President KCCI Iftikhar Ahmed Sheikh, representatives of business and industrial community said the recent exorbitant hike in gas tariffs was tantamount to landing into more and deeper troubles than expecting any good outcome of ill-planned and shortsighted attempts.

Vice Chairmen Businessmen Group Anjum Nisar and Jawed Bilwani, KCCI President Iftikhar Ahmed Sheikh, Senior Vice President Altaf A Ghaffar and Vice President Tanveer Ahmed Barry with presidents and  representatives of industrial town associations and value-added textile associations were also present on the occasion.

BMG vice chairman said today’s press conference is not going to be the end of the story as it will be followed by a series of press conferences in all industrial town zones, displaying protest banners at the offices of trade associations, observing no export day once a week.

“If the government fails to pay attention to business community’s demand, we will intensify our protests by displaying protest banners all over the city and observe no export day twice and even thrice a week.

We will only wait till the first week of December for the government to announce a cut in gas tariff but if it does not happen, we will have no choice but to intensify protests,” he said.

He said the business community still awaits the promised winter package for incremental consumption of electricity wherein it was agreed to provide electricity at reduced tariff of Rs20 per unit on incremental consumption during four months of winter season.

He said the new gas tariff has burdened the industries with cross subsidy for undeserving and unfair support to fertilizer, domestic and power sector.

“The industry demands fair gas tariff of Rs1,350 per mmBtu but would never accept the unbearable and unabsorbable gas tariffs ranging from Rs2,100 to Rs2,600 per mmBtu which have been imposed to please the fertiliser, domestic and power sectors and terribly penalize the industrial sector of the country,” he said.

He said the gas tariff for fertiliser sector in neighboring country was US$6.5 per mmBtu whereas in Pakistan, gas to this particular sector was being provided at a much lower rate which was not making any sense as this was a sector which enjoys a profitability of around Rs40 billion and it also receives subsidy in gas tariff which was very strange and beyond anyone’s understanding.

“It is a matter of concerns that the fertiliser being produced in Pakistan through subsidized gas was being smuggled which is tantamount to smuggling gas as this sector takes away a huge portion of gas for fertilizer production”, he added.

He said 95 per cent of the subsidy on RLNG was consumed in the SNGPL network where RLNG consumption was in between 800 to 1,000 mmcfd while in SSGC’s territory, only 50 mmcfd was being consumed but the SSGC-linked industries were burdened with cross-subsidy to benefit other sectors. “No-where in the world, export/ import substitute industries are burdened with cross-subsidy to benefit other sectors but they are, rather, facilitated to lower their cost so that they could compete globally to enhance exports.”

KCCI President Iftikhar Ahmed Sheikh said instead of thinking out of the box to increase gas supplies, the government was contemplating to re-prioritize the existing gas supplies switching from one set of consumers to the other and raising the tariffs to completely unbearable level, which was purely against the spirit of Pakistan’s Constitution and a sheer violation of Article 158.

He said the government has to understand that 100 per cent to 130 per cent rise in industrial and captive gas tariff will be highly detrimental for the economy as it would lead to closure of industries, trigger lay-offs, causing serious law and order situation, steep rise in street crimes and bankruptcy of manufacturing units.

“The unwise move to raise gas tariff will badly hit the value-added exports and the industrialists will have no other choice but to revert back to exporting the raw materials which would, subsequently, provide a perfect opportunity to competitors to easily take over Pakistan’s exports share,” he said.

He said the industries of Karachi were already suffering from high cost of manufacturing due to highest water tariffs, disruption in supply of utilities and additional cost due to precarious law and order situation therefore, the government must immediately withdraw the hike in gas tariff.

Keeping in view the gravity of situation wherein all the industries of Karachi are already on the verge of the  complete collapse, representatives of business and industrial community hoped that without losing further time, the government would take notice of business community’s plea and announce to bring down gas tariff to an acceptable level.