LAHORE: Sui Northern Gas Pipeline Ltd (SNGPL) says that the decision to provide gas to the zero-rated sectors – textile, carpets, leather, sports and surgical – is subject to provision of subsidy in line with the billing and financial support mechanism clearly explained in the finance ministry’s letter.
“We have no issue with these sectors. We will continue billing them as per Oil and Gas Regulatory Authority (Ogra) notified rates of the system gas and the Regasified Liquefied Natural Gas (RLNG). However, we will immediately adjust these bills as soon as we receive subsidy from the government,” SNGPL’s Managing Director Amjad Latif told Dawn on Saturday.
The gas company said that it will follow instructions of the finance ministry by billing the sectors as per Ogra notified rates of system gas and RLNG.
According to finance ministry’s letter dated November 2, SNGPL has been directed to invoice the zero-rated industry at the notified prices and upon receiving subsidies — effective from Economic Coordination Committee (ECC) decision on October 16 — from finance division on monthly basis, the subsequent invoices to the industry will be adjusted at the approved weighted average price of $6.5 per mmBtu.
“Accordingly, based on the actual gas consumption, the SNGPL will submit subsidy claims duly signed by the chief financial officer and verified by the secretary (petroleum) to finance division. The division will disburse the subsidy to SNGPL which will credit the actual amount of subsidy received to zero-rated industry through immediate adjustments in the subsequent gas bills,” reads the letter.
Surprisingly, the ministry has dropped captive power from subsidy despite the fact that over 80 per cent of zero-rated industry runs on captive power to ensure frequent and smooth power supply without fluctuation and tripping.
On the other hand, Ogra’s price notification for the system gas issued on August 18 included the five zero-rated industry and their captive power.
MD Amjad Latid said there would be no subsidy for the industry being run through captive power, as the finance ministry letter clearly states: “Previously in view of the electricity shortage, significant volume of gas was required to be consumed by the industrial sector for power generation. However, currently given the assured availability of electricity in the system, the subsidised gas is not required for power generation.
Accordingly the subsidised gas will be provided to zero-rated industry for production process purposes only while electricity will be available to the industry as per government’s notified rates. So the subsidy given by the government during current fiscal year will therefore be restricted up to 185mmcfd with 10pc variation in consumption”.
He said the issues raised by industry must raise these issues with government and SNGPL does not have the powers to do anything in the matter. “These are the issues at the level of Ogra and finance and petroleum ministries and not the SNGPL. So the business community is better required to contact them, as we are here to follow government policy and decisions,” he added. He also said that this was not an issue and the government is highly likely to provide the proposed subsidies.
However, the industry has urged the government to fulfill and implement its own decision of billing the zero-rated industry at the rate of $6.5 per mmBtu and 7.5 cents per electricity unit.
“A wrong calculation has been worked out. Restriction of subsidy on 185mmcfd gas means that there would be no change of tariff for the entire five zero-rated sectors. 185mmcfd including around 50mmcfd and 135 being used by the industry not dependent and dependent on the captive power respectively.
They don’t know how the 80pc industry would continue its operation without smooth captive power-supply that is the only way to manufacture quality products/goods,” deplores an industrialist.
He said that it seems the government had deceived the industry rather than fulfilling its promise of developing the country through export-led growth.
Published in Dawn, November 11th, 2018