KARACHI: Chairman Businessmen Group Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI), Muhammad Jawed Bilwani, while strongly opposing proposal to increase gas tariff for industrial processes in the upcoming meeting of the Economic Coordination Committee (ECC), termed the proposal illogical and detrimental to Pakistan’s already struggling industrial sector, particularly at a time when input costs are surging and exports are under severe pressure.
Zubair Motiwala and Jawed Bilwani emphasized that the move is unjustified given the current energy market dynamics. They noted that international Brent crude prices have declined, and the SNGPL system is already dealing with a surplus of imported RLNG, with around 300 to 400 MMCFD going unutilized.
This surplus exists because power and captive sectors are reluctant to purchase RLNG at exorbitantly high rates compounded by excessive taxes and levies, which has resulted in inefficient resource utilization. Rather than penalizing the industrial sector, the government should be working to improve gas supply management and rationalize pricing.
They emphasized that while only around 80 to 100 Independent Power Producers (IPPs) utilize process gas, it is critical to recognize that the livelihoods of over 8,000 Small and Medium Enterprises (SMEs) also depend on this essential resource. Any increase in the gas tariff would severely impact the already struggling SME sector, which plays a vital role in the country’s economic fabric. Rather than imposing a hike, a more prudent policy would be to reduce the process gas tariff by at least 20 percent, enabling SMEs to remain operational and contribute effectively to the economy, they suggested, adding that at a time when the business community is already burdened by the harsh taxation measures introduced in the budget, a tariff increase would only deepen their challenges. Given that the country has surplus indigenous gas, the logical course of action would be to offer it at lower rates to stimulate industrial consumption, boost production, and drive economic growth.
They further highlighted that OGRA itself, in its decision dated May 20, 2025, approved a significant reduction in gas tariffs for SSGC by PKR 103.95 per MMBtu, setting the new rate at approximately PKR 1,658.56 per MMBtu. This decision was made in recognition of cost realities and declining fuel prices. “If OGRA found justification to reduce the tariff for SSGC, how can the government justify a hike for industrial consumers?” Chairman BMG and President KCCI questioned.
They added that such contradictory measures create serious disparities and undermine industry confidence in policy consistency. They also pointed out that OGRA’s determination for SNGPL prescribed a revised price of Rs 1,895.25 per MMBtu, which is still below the proposed hike. Moreover, during OGRA’s own hearing process, several petitioners highlighted the existence of a projected RLNG surplus of approximately 400 MMCFD; equivalent to 79,337 BBTU or nearly 25 LNG cargoes. Petitioners also demanded the revision of Brent crude pricing assumptions in OGRA’s ERR, noting that the assumed price of USD 75.33 per barrel was higher than global spot rates, leading to artificially inflated diversion costs and non-transparent, non-cost-reflective pricing.
Copyright Business Recorder, 2025
