All Pakistan Textile Mills Association (Aptma) on Friday expressed concern over the recent plan announced to alter the basis for fixation of the natural gas retail tariffs.
"It reflects a complete lack of concern about the impact that it would have on the competitiveness of the domestic industry," said Chairman Aptma, Shafqat Ellahi Shaikh in a statement.
"The proposal to equate the profits to be assured to the two distribution companies ie Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC) to a figure equal to KIBOR plus eight percent than the already unjustified figure of 17.5 percent return on assets calculated on the asset base of the two companies was a continuation of the thinking that sees privatisation proceeds as an easy answer to the country's ever growing foreign exchange needs, Aptma chairman added.
"Contrary to the requirement of the law as defined in the natural gas (price for supplies by producers) rules, 1976, retail prices are to be regulated in accordance with the national gas tariff rules 2002 and oil and gas regulatory ordinance 2005, well-head prices payable to the production companies for gas from the Sui, Kandhkot and other fields has been increased by over 85 percent by the Federal government over the period 2004-06," he remarked.
The statement said the unjustified increase in well-head prices had resulted in Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company Limited (OGDCL) declaring far-fetched profit levels with return on equity in excess of 50 percent for the year ended June 30.
"The entire artificial increase in well-head prices along with a profit margin of 17.5 percent based on unrealistic capital expenditure plans on the part of SNGPL and SSGC had been passed on the consumers of natural gas, in particular to the industrial consumers. "Consequently, natural gas tariffs applicable to industrial consumers increased by over 48 percent during the year 2005-06," Shaikh elaborated.
He said the beneficiaries of this unjust and unwise pricing strategy were the two distribution companies (SNGPL and SSGC) and the production companies, primarily PPL and OGDCL, the statement said.
The statement maintained that generation of artificially high profits for these entities in the hope of high privatisation proceeds, was a policy aimed at crippling the domestic industry, while at the same time denying it the advantage of a naturally available source.-PR
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