KARACHI, May 29: The Site Association of Industry (SAI) has flayed the decision of Oil and Gas Regulatory Authority (Ogra) for allowing an average increase of Rs10.23 per mmbtu to Sui Southern Gas Company (SSGC) in its tariffs from July 1.
In a statement SAI chairman Muhammad Nisar Sheikhani termed it another blow to the already badly affected industries reeling under heavy utilities charges.
SSGCL had filed a petition with Ogra, seeking gas tariff rise on the grounds of increase in well-head price of gas.
The gas price hike was claimed for no other reason than increase in prices of crude oil and furnace oil in global markets, Mr Sheikhani said adding that in terms of gas, the difference was calculated upward, on an average, at Rs8.50-9.00 per mmbtu than the prevailing price.
He said that the gas company initially filed a petition for upward revision by Rs18.81 per mmbtu (double the increase in well-head price) and then, during the Ogra hearing scaled it down to Rs14.51 per mmbtu.
He said it was now clear that there was simply juggling of figures on a pretext that, in itself, was questionable. It also clearly manifested the mindset of the hierarchy who wished a "share in spoils" to jack up their salaries, perks and benefits indifferent to the serious repercussions on the industries, he added.
The industries in the city would suffer a double blow like higher cost of gas and higher rate of electricity, as KESC is the largest consumer of SSGC. The industries in Karachi cannot remain competitive with the cost of producing goods already very high and, with the WTO implementation, a serious economic crisis will prevail, he said.
If exports are to be viable and the economy remains as export growth economy, the government must take radical steps, he said urging that the well-head prices of gas must be capped.
"The gas exploring companies have already amortized the exploration costs in their sale price. The operating and maintenance costs of their plants are taken care of in the price of gas. Then how does the price of crude oil/barrel or furnace oil/ton affect the cost of gas? When the international prices of these commodities had gone down, the well-head prices of gas had never been revised downward. What, then, is the rational or justification in upward revision now?" the Site chief asked.
The government must re-evaluate its policy of providing gas to the fertilizer industry at ridiculously low subsidized rates at the expense of the industry.