Five export-oriented sectors: SNGPL directed to supply gas/RLNG without any subsidy

ISLAMABAD: Ministry of Energy (Petroleum Division) has directed Sui Northern Gas Pipeline Limited (SNGPL) to supply gas/RLNG to five export-oriented sectors without any subsidy.

In a letter to Managing Director, SNGPL, Directorate General of Gas (Petroleum) Division has informed that no subsidy has been budgeted for five-export-oriented sectors during the current financial year by the government, therefore, SNGPL may raise invoices as per already approved mechanism of the ECC of the Cabinet to provide blend of 50:50 of system gas and RLNG during nine months (March to November) and 100 per cent for remaining three months of the year with the subsidy.

Last week, a delegation of All Pakistan Textile Mills Association (APTMA) led by its Pattern in Chief, Ijaz Gohar held meetings with the top authorities in Islamabad to convince them for a regionally competitive tariff of electricity and gas to make the industry viable. However, the delegation did not get positive response from the authorities as they cited stringent conditions of International Monetary Fund (IMF).

Rs80bn gas subsidy to five export sectors ends

The textile industry, is, however hopeful that it will perform better due to better cotton crop in Punjab due to efforts of caretaker Chief Minister Punjab, Mohin Naqvi.

Last month APTMA has again repeated its demand of resuming gas and electricity supply at concessional rates and warned the failure to do so would cause unemployment, loss of export revenue and further deterioration in the trade balance.

In a letter to Prime Minister Shehbaz Sharif, APTMA Patron-in-Chief Gohar Ijaz urged him to restore the Regionally Competitive Energy Tariffs (RCET) for the export industry.

He noted that the government, in spite of the fiscal challenges, continued with the RCET facility for most of the year; however, the withdrawal at a time when the country was in need of foreign exchange could only be described perplexing.

According to Ijaz, the RCET does not require any subsidy and is more or less equal to the cost of service. The subsidy arises as a consequence of the Nepra tariff regime that cross-subsidizes other sectors and underperforming DISCOs. These should in all fairness be funded directly by the government as part of their socio-political obligation.

The letter reads that the absence of a viable energy tariff could result in the closure of 75 per cent of the industrial establishments in Punjab within the next three months.

It added that the impact of non-continuation of the RCET would not be limited to the large-scale manufacturing (LSM) sector, but was also going to affect small and medium enterprises (SMEs) and cottage industries.

Copyright Business Recorder, 2023