KARACHI, Nov 12: While strongly opposing further increase in gas tariff, the representatives of industry have called upon the government to take steps it had agreed for rationalisation of natural gas pricing regime involving cross subsidies.
Former president of the Karachi Chambers of Commerce and Industry Zubair Motiwala told Dawn on Wednesday that the KCCI, along with 10 other chambers and various associations recently had a long deliberation with the finance minister in Islamabad in which the matter of gas was also discussed and the minister had, according to him, agreed that there was a room for downward revision in recent increase.
Mr Motiwala claimed in that meeting it was noted that variance in wellhead price of gas should be negotiated as Kadanwari and Qadirpur fields with high tariff need to be brought down.
It was also pointed out that gas, one of the main sources of generating electricity and being an indigenous raw material, must have a capping mechanism so that brunt of international oil price would not affect the gas price to that extent.
He pointed out that this mechanism was disturbed by the previous government in its last days and called for restoring the mechanism.
It was also stressed that cross subsidy to feedstock should be borne by the government. In this context he cited from a summary for cabinet committee on energy in which it was pointed out that “natural gas sector is historically loaded with cross subsidisation under which the consumers in power, industrial, and commercial sectors pick up the cost of subsidy for fertiliser and domestic sectors.”
It was, therefore, suggested that “the policy of cross subsidisation should be addressed in a rational and prudent manner; otherwise the subsidy amount will keep on ballooning and will totally suffocate the industrial sector.”
According to that summary the “the appropriate way to do away with this cross subsidy is that the subsidy being given to domestic and fertiliser sector consumers may be picked up by the government through budgetary provisions and not through the current dispensation”.