LAHORE: Punjab’s textile industry continues to be at loggerheads with the Ministry of Petroleum over the payment mechanism for subsidy on imported gas to five zero-rated export-oriented sectors.

The industry wants upfront payment of subsidy and is demanding that the ministry should instruct the Sui Northern Gas Pipelines Limited (SNGPL) to make it a part of the bills by charging them the new reduced price of $6.5mmBtu.

The ministry, on the other hand, is insistent that factories pay the bills raised on the basis of actual price of liquefied natural gas (LNG) as the amount paid on their bills beyond the subsidised price would be reimbursed to them and adjusted in their next billing cycle. This means the additional amount paid by the industry on their January bills will be adjusted in their February bills.

“We have proposed to the SNGPL that the utility should raise our gas bills on the 16th of every month after receiving the subsidy amount from the ministry instead of 1st of every month,” All Pakistan Textile Mills Association (Aptma) Chairman Ali Ahsan told Dawn on Friday.

He said the factory owners were already facing significant liquidity crunch due to a variety of reasons including the inordinate delays in release of their tax and other refunds by the Federal Board of Revenue (FBR).

“The monthly subsidy amount on the gas bills of the five zero-rated industry in Punjab is estimated to be between Rs2 billion and Rs2.5bn. This is a huge amount and unless our proposal is accepted, it would worsen the liquidity crunch facing the exporters.”

The government has already transferred a sum of Rs25.7bn to the petroleum ministry to subsidise the gas bills of the zero-rated sectors till June end.

Minister for Finance Asad Umer had announced the subsidy in September on the use of LNG by the export industry from Punjab to equalise fuel prices across the country.

Exporters in Sindh and Khyber Pakhtunkhwa enjoy priority access to domestic gas since both the provinces are gas producing regions. However, the industry in gas-starved Punjab was forced to use expensive imported gas and paying more than double of what industry in Karachi or Khyber Pakhtunkhwa pays.

The subsidised gas price had come into force from October 15 but many users have gone to the court to prevent the gas company from charging them beyond the new rate.

Published in Dawn, February 2nd, 2019