KARACHI: Energy Mini­s­ter Muhammad Ali has assured businessmen of trying his level best in the cabinet’s meeting to bring down the gas tariffs which were being raised to stop circular debt from further appreciation.

Speaking at the Karachi Chamber of Commerce and Industry (KCCI) on Saturday, the minister informed that the entire gas sector has constantly been suffering grave losses of around Rs400 billion annually for the last many years which has reached Rs461bn, resulting in accumulating the overall losses of the gas sector to a whopping Rs2,100bn, hence, raise in gas tariffs has been recommended.

“Work is underway to release the stuck-up Rs7bn payable to industries against previous incremental consumption as committed by Secretary Energy while the Ministry is also working on introducing a winter package for incremental consumption this year,” the minister said.

Energy minister says ECC took this decision to check rise in circular debt

According to KCCI’s press release, Mr Ali said, “No government willfully raises prices of any product but we all have to understand the reality and decide accordingly.”

Ogra’s determination of Rs1,350 per mmBtu is purely based on average pricing for the whole year which covers losses of natural gas only and does not include the more expensive cost of LNG.

He said with ECC’s decision to increase gas tariffs, 60pc of domestic consumers will bear the burden of Rs400 per month whereas gas tariff for richer segments has been brought on a par with LNG prices.

The energy minister said the government has ensured to keep the industries/exporters competitive by raising gas tariffs to around $8 per mmBtu which was close to competing countries. In India, the gas tariff stood at $9 while in Bangladesh it was $8.25. “The measure has also been taken to reduce the gas tariff difference between the north and south”, he added.

He said the gas supply situation this year will more or less be the same as it was last year but SSGC has been advised to come up with some kind of mechanism to ensure a smooth supply of gas to all types of industries for five days a week not only in winter but throughout the year.

Last year, the general industries remained closed for four months and supply to export-oriented industries was curtailed by 50pc. “We are trying to make sure it does not happen again this year, and all types of industries remain operational for five days a week during winter,” he added.

Businessmen Group chair­man Zubair Moti­wala while urging the government not to accept ECC’s decision to raise gas tariffs for export-oriented and general industries by 86pc and 117pc, respectively, said that Ogra determined a much lesser appreciation in gas tariff ie, Rs1,350.68 per mmBtu as per revenue requirements but the ministry has recommended whopping gas tariff of Rs2,050 for export-oriented industries and Rs2,600 for general industries which was beyond business community’s understanding.

Published in Dawn, October 29th, 2023