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Sindh, Punjab textile exporters split over gas pricing

Updated December 04, 2016

LAHORE: Textile exporters from Sindh and Punjab are divided over the gas tariff differential for industry in the two provinces, with Punjab exporters demanding uniform price for the entire industry.

Currently, the rate of Regasified Liquefied Natural Gas (RLNG) to Punjab industry is around Rs932 per million British thermal unit (mmBtu) compared to the system gas which is being provided to Sindh industry at Rs600 per mmBtu.

The finance minister recently announced a cut of Rs200 per mmBtu for system gas under the Gas Infrastructure Development Cess (GIDC), but it has yet to be notified.

Exporters from Sindh, who are using only system gas as per constitutional requirements, are sticking to their stand that the government should supply them natural gas at Rs400 mmBtu after the federal government notifies the reduction of Rs200 per mmBtu.

Textile industry representatives in Punjab argue the current difference of Rs330 per mmBtu is already increasing the cost of doing business and non-competitiveness in local as well as international markets and further reduction of Rs200 per mmBtu will aggravate the situation.

“Forget international competitiveness for the time being, how do you expect Punjab’s export industry to compete with Sindh in terms of export orders given the current price discrimination which is increasing cost of doing business,” questioned Aziz Ullah Goheer, secretary general of Pakistan Textile Exporters Association.

“We are demanding the government to apply weighted average price between system gas and RLNG which will stand somewhere between Rs500 and Rs550 mmBtu”, he said.

“We are not against the cheap provision of gas to Sindh-based industry but we do want gas for Punjab on equal footing. The government can at least give subsidy either on RLNG or restore system gas till the severity of winter to reduce gas tariff difference,” he suggested.

A Punjab-based textile exporter, who wished not to be named, said exporters want the government and Sindh-based textile industry to agree with a uniform rate for monthly gas tariff across the country.

If Sindh government can take up the matter of GIDC with the federal government for its successful withdrawal under the 18th Amendment, why can’t the Punjab government ensure relief for its textile industry, he questioned.

Sui Northern Gas Pipelines Limited Managing Director Amjad Latif said the company was not in position to discuss gas price differential unless it receives a notification from the Ministry of Petroleum and Natural Resources.

To decide any price mechanism, keeping in view the price difference between system gas and RLNG among the provinces, is the exclusive domain of the federal government, he added.

Published in Dawn December 4th, 2016