SITE industrialists alarmed over proposals to hike power, gas tariffs

KARACHI: SITE industrialists have expressed their concerns over proposals to increase power and gas tariffs. They have appealed to Prime Minister Imran Khan not to increase the utilities tariff in view of the ongoing financial crises.

A meeting of the industrialists was held at the SITE Association of Industry (SAI) to deliberate upon the press conference held by the federal information minister and the special assistant to the PM on petroleum.

The meeting was attended by Zubair Motiwala, patron of SITE Association of Industry, Abdul Hadi, president of SITE, former presidents Jawed Bilwani and Saleem Parekh and others.

The SITE industrialists reminded the prime minister that the policy they wanted to adopt was basically briefed by the ministry concerned that it was inevitable to enhance tariffs in order to bring the circular debt to zero level.

They reminded the prime minister that the briefings he had been given did not tell him about the reasons for the accumulation of the circular debt, and with regard to gas circular debt, it was mismanagement, theft, line losses and cross-subsidization to other sectors.

They said that it seemed that the press conference had been held with the consent of the prime minister. They said that the prime minister had to realize that this circular debt was not because of the industry which paid more than 98 percent of its dues, and the "Unaccounted for Gas (UFG)" by the industrial sector was less than 2 percent.

On the other hand, UFG, theft and pilferages by other sectors were huge. In rural areas of Sindh and Balochistan, it was to the extent of more than 60 percent in many cases.

They said that their competitors were getting energy at less than 50pc tariff, and they were fast becoming "uncompetitive with our regional arch rivals in the intentional markets".

Ogra had advised 6pc reduction in the indigenous gas tariff, but the prices were increased by 33 and 66 rupees by the notification issued by Ogra. The SITE industrialists said that it was surprising that the vision of the prime minister and that of his ministries were so different that they contradicted each other.

When they talked about increasing the rate of tariffs, the industry got alarmed because it had been paying its dues.

"The reasons of circular debts are selling of the gas at less than 30pc of the tariff to the fertilizer industry and that the burden of the 70pc of gas is put on the industries through cross subsidization, huge domestic theft, pilferages and line losses, huge losses in the commercial sector, in-house gas consumption and fixed return on assets of 17pc and 17.5pc to SSGC and SNGPL which are found nowhere in the world, and these are the basic areas which create circular debt and not the industry," they pointed out.

"If we cancel cross-subsidization, domestic line losses, commercial line losses, UFG, with no subsidy or reduction in price to industry, the industry price come to less than 700 rupees."

The SITE industrialists further stated that the sector which was responsible for 54pc of Pakistan's exports was given a bit of an advantage, but it was then taken away and the rate of Rs786 which was given to the textile sector had now been brought to Rs930 on the grounds of putting RLNG into the system.

The Industry having exports commitments had no choice but to accept the decision of the ministry, which should be reverted. It was ironic that the government was penalizing the sector which was the best paymaster, and the burden was being put on the industries, especially on the textile sector.

The industrialists appealed to the prime minister to give them a chance to make a detailed presentation before him on the subject matter, explaining historical facts and the current crisis. They said that the post-Covid-19 scenario would be very competitive for exporters and domestic markets. It was the need of the hour that Pakistan went along with the world.

"Price of gas should be reduced because international prices have gone down. It is a must for enhancement of exports and manufacturing sector," they said.

Copyright Business Recorder, 2020