Industries oppose gas price hike proposal

Demand tariff reduction due to lower interest rates, UFG losses

KARACHI:

While strongly opposing the Oil and Gas Regulatory Authority's (Ogra) recommendation for a gas price hike for Sui Southern Gas Company (SSGC), Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Jawed Bilwani has said that this unjust increase will add to the burden on the public and industries already grappling with high inflation and soaring energy costs.

Bilwani pointed out that rather than recommending the gas tariff hike, Ogra should have proposed a reduction in prices, citing key factors such as lower interest rates and a decrease in unaccounted-for gas (UFG) losses.

"While interest rate hikes are typically factored in when considering gas tariff increases, the recent reduction in interest rates has not been taken into consideration, which could have resulted in lower gas tariffs. Moreover, the UFG has also been reduced by SSGC, indicating room for slashing gas tariffs."

The KCCI president highlighted the promises made by the Ministry of Petroleum to reduce gas prices to support the exporting industries. He noted that Ogra's recommendations contradicted those assurances, undermining the government's commitment to helping industries remain competitive in the global market.

Bilwani appealed to the prime minister to direct Ogra to reconsider its recommendations and instead focus on alternative solutions. "We urge the government to ensure that the industries are not further burdened. If the tariff hike is inevitable, it should be borne by other sectors, not industries, which are already struggling," he said.

He also urged the federal government to focus on addressing the root causes of revenue shortfall, particularly gas theft and pilferage, which continue to contribute to the financial woes of gas distribution companies. "Instead of price hike, the government should work to curb gas theft and improve efficiency in the system," he said. "How can Ogra justify the price increase when gas provided to Balochistan without any revenue is not treated separately in evaluating the tariff? These discrepancies need to be thoroughly addressed."