FPCCI urges Ogra to revoke increase in gas price

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged Oil and Gas Regulatory Authority (OGRA) to revoke increase in gas tariff as the decision has serious repercussions on industrial sector.

FPCCI President Mian Anjum Nisar in a statement on Tuesday expressed concerns over the unkind upswing in natural gas prices.

He said that this decision would seriously affect the industrial sector, especially exporters and the value-added sector would be hit hard also affect the cost of energy as well as the cost of production of exportable goods.

The economy of Pakistan had severely affected by the outbreak of Corona Virus disease (COVID-19) during the last seven months and the main cities of Pakistan Karachi and Lahore have also affected by urban flooding.

The industries particularly the SMEs are striving to deal with the post-Corona economic crunch and need to get support in one or another way, instead of getting subsidies or waivers, it seems to be cruel to overburden the industries with inflation.

An increase in natural gas costs will further weaken the economic environment which is already under threat on various fronts.

Today, Federal Minister for Petroleum Ghulam Sarwar Khan and Information Minister Fawad Chaudhry addresses a press conference in Islamabad, announcing the increase in natural gas prices by up to 143 percent to recover Rs 94 billion from consumers, it fears inflation due to an increase in the price of commodities.

This hike in prices will directly affect 9.4 million domestic users among which 3.6 million of them falling in the lowest income slab and another 2.63 million in the second-lowest income group. Electricity will become also expensive by 12 percent due to the increased prices of natural gas.

According to the media reports the Economic Coordination Committee (ECC) of the cabinet allowed raise in the gas prices for domestic consumers in the range of 10 percent for the lowest slab consumers to 143 percent for the highest slab domestic consumers.

It also approved increasing gas prices for commercial and industrial consumers from 30 percent to 57 percent that will increase the prices of fertilizer, manufacturing units, electricity generation, cement, and Compressed Natural Gas (CNG).

Up to 143 percent increase in gas prices is expected to follow around a 35 percent increase in electricity prices in the coming weeks. This shows that the gas consumers will pay an additional Rs 94 billion in the ongoing fiscal year to gas utilities.

President FPCCI demands the government to withdraw the proposal of the increase in Gas tariffs of SSGC otherwise; industry will face closing down which will ultimately result in unemployment and labor instability.

However the Ministry of Petroleum (Petroleum Division) had proposed a reduction in natural gas prices, back in September 2020, by up to 12.3 percent for captive power plants, 15.2 percent for captive plants in the textiles sector, 5.6 percent for textile processing, 4.5 percent for the gas industry and CNG, 3.9 percent for cement and 5.4 percent for the power sector.

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