Gas price hike: Ogra’s move to add to the woes of masses and industries alike: KCCI

KARACHI: Karachi Chamber of Commerce & Industry (KCCI) President Jawed Bilwani while strongly opposing the Oil and Gas Regulatory Authority’s recommendation for a gas price hike for Sui Southern Gas Company Limited (SSGCL), stated that this unjust increase would add further burden on the public and industries already grappling with high inflation and soaring energy costs.

Bilwani pointed out that rather than recommending a gas tariff hike, OGRA should have proposed a reduction in gas 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 decreasing the gas tariffs.

Instead, OGRA is recommending a price increase, which is perplexing,” he said. “Moreover, the UFG has also been reduced by SSGC, indicating room for lowering gas tariff, not raising it.”

KCCI President also highlighted promises made by the highest hierarchy of government including the Ministry of Petroleum to reduce gas prices to support the export sector but OGRA’s recommendations contradicted these assurances, undermining the government’s commitment to helping industries remain competitive in the global market.

In light of these concerns, 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 a tariff hike is inevitable, it should be borne by other sectors, not industries, which are already struggling to pay the highest gas bills,” he said.

Bilwani also noted that SSGCL’s financial problems are aggravated due to provision of 200 MMCFD of gas to Balochistan without receiving any revenue in return.

“How can OGRA justify a price increase when the gas provided to Balochistan without any revenue is not treated separately in evaluating the gas tariff? These discrepancies need to be thoroughly addressed in OGRA’s recommendations to the government”, he said, adding that OGRA was failing in its duty of giving the true picture to the Prime Minister and the government.

He emphasized that the timing of the proposed tariff increase is particularly damaging, as it comes at a moment when businesses and the general public are already dealing with rising costs. “The proposed hike, especially the massive 25.78% increase for SSGCL, will severely impact manufacturing and exports, which had recently shown signs of recovery,” Bilwani stated. “It’s troubling that every time the economy shows signs of improvement, such anti-business measures are introduced, stifling growth and competitiveness.”

President KCCI also expressed concerns about the potential negative impact on export-oriented industries, particularly those relying on gas-powered Captive Power Plants (CPPs).

“Cutting off gas to these plants will waste significant investments and create further uncertainty in the sector,” he warned.

Bilwani concluded by urging the government to take urgent action, calling for the immediate rejection of OGRA’s recommendations. “We need to prioritize the well-being of our economy and citizens. The proposed gas price hike is short-sighted and will only deepen the financial strain on both businesses and consumers,” he said.

He also urged the federal government to focus on addressing the root causes of the revenue shortfalls, particularly gas theft and pilferage, which continue to contribute to the financial woes of gas distribution companies. “Instead of imposing price hikes on customers, the government should work to curb gas theft and improve efficiency in the system,” he added.

On behalf of the entire business community in Karachi, Bilwani called on Prime Minister Shehbaz Sharif to take immediate action in rejecting the proposed gas price hike and protect the economic interests of the nation.

Copyright Business Recorder, 2024