Industrialists in Sindh flay reversal of gas price cut


KARACHI: The Sindh-based industry has objected to the reversal of the government’s earlier decision to cut the gas price for the industrial sector from Rs600 per million British thermal units (mmBtu) to Rs400 per mmBtu. It said the revised decision will increase the cost of production and render its products uncompetitive in the world market.
Industry leaders said reduced prices of wellhead contracts will benefit provinces at the cost of the industry after the reversal of the November 25 decision by the Economic Coordination Committee (ECC).
Earlier, the federal government had decided to reduce gas tariffs for the industry across the country by 33 per cent to Rs400 per mmBtu. The rate would go up by Rs200 per mmBtu to Rs600 per mmBtu after adding the Gas Infrastructure Development Cess (GIDC). However, no formal notification was issued regarding the price cut approved by the ECC in November.
The Punjab-based industry had protested against the ECC decision, claiming that it would benefit Sindh- and Khyber Pakhtunkhwa-based industry because up to 70pc control over the rights of natural resources rests with federating units after the 18th Amendment.
Punjab produces little gas and, as such, industrial units in Sindh and KP have ample availability of natural gas as opposed to those units based in Punjab.
Sindh Chief Minister Murad Ali Shah also objected to the reduced tariff as it transferred the benefit of low-cost gas-field contracts to the industry instead of the province.
Talking to Media, Al-Karam Textile Mills Managing Director Fawad Anwar said the industry is already suffering because of the delay in the implementation of the textile relief package promised a few months back.
All Pakistan Textile Mills Association Sindh Zone Chairman Asif Inam said the revised decision will put the Sindh-based industry at a disadvantage because most units in the province have captive power plants. This will result in a high cost of power generation for the industry, he added.
In contrast, most of the Punjab-based industry gets energy from independent power producers (IPPs), which generate electricity through gas, he said. The latest decision by the ECC has not changed gas tariffs for IPPs that continue to pay Rs400 per mmBtu plus GIDC of Rs100 per unit. As a result, Mr Inam said the industry in Punjab will get cheaper power from IPPs but its counterparts in Sindh and KP will have to pay a higher cost.