KARACHI: Sui Southern Gas Company (SSGC) has proposed an increase in gas price of Rs 109.78 per mmbtu to Rs 789.24 per mmbtu for the next financial year (FY21-22).
However, the stakeholders strongly opposed any increase in gas prices and argued that cost of doing business is already high in the country.
The regulator met the stakeholders in Karachi on Monday to determine gas consumer prices for 2021-22 subject to government’s approval.
A public hearing was conducted by Oil and Gas Regulatory Authority (OGRA) here at a hotel to review the gas price hike proposed by SSGC. Chairman OGRA Masroor Khan chaired the public hearing while member (Oil) and Member (Gas) were also present on this occasion.
The SSGC proposed to raise gas price to Rs 789.24/mmbtu. Currently, the gas price prescribed by SSGC is Rs 679.56/mmbtu. According to the SSGC, the gas distribution company is facing losses of Rs 3.34 billion in sale of gas and in RLNG around of Rs 16 billion. The SSGC calculates gas price at a specific rate of Rs 169 per dollar.
According to All Pakistan Textile Mills Association opposed the proposed hike in price, requesting Ogra to disallow “many of the adjustments”.
Razi Raziuddin, a consultant of APTMA, said that an out of box solution is needed and Ogra may recommend utilization of GIDC to cause reduction in gas prices. UFG, Induction of LNG and Wellhead prices are not sustainable and need a major downward revision. As per the Ogra Ordinance 2002, the regulator is required to minimize economic distortions, send appropriate price signals and ensure protection of consumers. According to him, all prescribed prices need to be lowered. APTMA recommended that the rate may be fixed at Rs 450/mmbtu for export-oriented zero-rated industries, including its associated power generation plants.
Zubair Motiwala, chairman Businessmen Group and former President Karachi Chamber of Commerce and Industry, also opposed any increase in gas prices. He claimed that “natural gas is being sold in name of RLNG”. He said both exchange and interest rates have declined. He said SSGC has saved a huge amount.
Copyright Business Recorder, 2021