Business Leaders Oppose Proposed Gas Tariff Hike for Pakistan's Industrial Sector

Strategic Insights -

Pakistan's already struggling industrial sector could be further crippled by a proposed gas tariff hike, argue leaders of the Businessmen Group (BMG) and the Karachi Chamber of Commerce and Industry (KCCI). Chairman of BMG Zubair Motiwala and President of KCCI Muhammad Jawed Bilwani have issued a joint statement opposing the hike, citing unjustified costs and the need to support Pakistan's small and medium enterprises (SMEs). The leaders believe that a 20% reduction in gas tariffs would help SMEs stay afloat, rather than a hike that would cripple them. This move comes as OGRA has recently reduced SSGC's gas tariff by Rs103.95 per MMBtu in light of falling global fuel prices.

Key Takeaways:

  • The proposed gas tariff hike for industrial processes is opposed by BMG Chairman Zubair Motiwala and KCCI President Muhammad Jawed Bilwani due to unjustified costs and concerns over SMEs.
  • The hike would negatively impact Pakistan's industrial sector, which is already struggling with rising input costs, harsh budgetary taxes, and electricity costs.
  • OGRA has reduced SSGC's gas tariff by Rs103.95 per MMBtu, reflecting falling global fuel prices, but the proposed hike for industrial users could not be justified.
  • More than 8,000 SMEs rely on process gas, with only 80 to 100 Independent Power Producers (IPPs) using it.
  • A tariff increase would cripple SMEs, which form the backbone of Pakistan's manufacturing sector.
  • Industry leaders called on the Economic Coordination Committee (ECC) to withdraw the proposal and conduct a transparent review of gas pricing, aligning it with OGRA's findings and global trends.
  • Petitioners during OGRA's hearings also raised concerns over inflated RLNG diversion costs and unrealistic Brent crude pricing assumptions that distort true gas pricing.

Statistics:

  • 300 to 400mmcfd of imported RLNG goes unutilized due to high prices and excessive taxes.
  • Brent crude prices have declined.
  • 80 to 100 IPPs use process gas.
  • More than 8,000 SMEs rely on process gas.
  • SSGC's gas tariff reduced by Rs103.95 per MMBtu by OGRA.
  • OGRA set a revised tariff of Rs1,895.25 per MMBtu for SNGPL.

Sources:

  • [Zubair Motiwala, Chairman Businessmen Group and Muhammad Jawed Bilwani, President Karachi Chamber of Commerce and Industry]
  • OGRA's decision on May 20, 2025, reducing SSGC's gas tariff by Rs103.95 per MMBtu.