KCCI opposes increase in gas tariff

‘Rate in Bangladesh is less than half of ours’.

KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has expressed concerns over the increase in gas tariffs even though the Oil and Gas Regulatory Authority (Ogra) had recommended otherwise.

In a statement released on Saturday, KCCI President Mian Abrar Ahmad said Ogra had adopted the Weighted Average Cost of Gas (WACOG) method wherein open-market crude oil prices were the criterion for determining gas tariffs.

“International oil prices have drastically decreased from $135-$140 to below $80 per barrel, which is a reduction of about 40%. In all fairness, the tariff should have been revised 40% downwards.”

President KCCI termed the increase in tariffs by more than 10% a surprise. “It is further surprising that CNG tariff has been reduced in real terms. One fails to understand that which sector is more important,” Ahmed said. He warned that another 10% in gas tariff is likely to be the last nail in the coffin of country’s economy.

The statement said that enhancing the gas tariff would affect Pakistan’s exports, and leave a bad impact on the value-added textiles sector.

“The value-added textiles sector will suffer the severest blow, as Bangladesh’s gas tariff is already lower than ours by more than 50%.”

The statement quoted the KCCI president as saying that utilities such as Sui Southern Gas Company and Sui Northern Gas Pipelines should not be a tool for revenue generation and the government must refrain from considering them so.

He demanded immediate withdrawal of tariff enhanced to the industry and rather provide the relief to make the industry more competitive globally. The idea of imposing Gas Infrastructure Development Surcharge (GIDS) is also not accepted, he maintained.

Published in The Express Tribune, July 2^nd, 2012.