KARACHI – The Karachi Chamber of Commerce and Industry (KCCI) has formally rejected a petition by Sui Southern Gas Company (SSGC) seeking a massive hike in gas tariffs for the fiscal year 2026-27.
In a joint statement, Chairman Businessmen Group (BMG) Zubair Motiwala and President KCCI Muhammad Rehan Hanif strongly opposed the proposal submitted to the Oil & Gas Regulatory Authority (OGRA). They urged the regulator to dismiss the petition, citing its potential to cause irreparable damage to the national economy and industrial sustainability.
Alarming 286% Cumulative Increase
The KCCI leadership expressed grave concern over the scale of the proposed hike. While SSGC requested a 121% increase on a standalone basis, the accumulation of shortfalls exceeding Rs. 545 billion pushes the effective hike to an alarming 286 percent.
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If approved, the prescribed gas price would soar to approximately Rs. 6,855 per MMBTU, inflating the total revenue requirement to a staggering Rs. 1.28 trillion.
Inefficiency Passed to Consumers
The Chamber emphasized that the petition appears to be a mechanism for recovering historical financial inefficiencies rather than reflecting the actual cost of service. Key points of contention include:
• Surging Expenses: Despite a 9.4% decline in gas throughput, operating expenses have surged by over 108%.
• Unfair Burden: The inclusion of Rs. 312 billion as interest on Gas Development Surcharge (GDS) receivables and Rs. 16.35 billion for Balochistan revenue shortfalls was flatly rejected as policy-related costs that the government should bear.
• UFG Losses: High levels of Unaccounted-for-Gas (UFG), including theft and leakages, remain unaddressed while costs are passed to paying industrial consumers.
The Threat of Deindustrialization
The KCCI warned that the current trajectory is leading toward a total industrial shutdown. The impact of high tariffs is already visible, with the number of operational captive power plants dropping from 200 to fewer than 80.
“Increasing tariffs in an environment of declining demand and struggling industry is not a viable solution. This reflects a flawed approach that will only intensify industrial contraction,” the leadership stated.
Cross-Subsidy Framework Criticized
The leadership also took aim at the existing cross-subsidy framework, where the industrial sector is forced to bear the 85-90% subsidy gap for domestic users. They argued that such subsidies should be transparently funded via the federal budget to avoid distorting market dynamics.
Appeal for Prime Ministerial Intervention
Zubair Motiwala and Rehan Hanif have appealed to the Prime Minister to intervene and ensure the withdrawal of the SSGC petition. They called for a revised proposal focused on rationalizing energy pricing to support the export-oriented and import-substitution industries that are currently being forced into uncompetitiveness. The Chamber reiterated that sustainable economic growth is impossible without improved governance within the gas sector and affordable energy for the productive segments of society.