Monday Jul 04, 2022
The representatives of eight trade and industrialist associations held a joint press conference at the Karachi Press Club on Sunday, urging the government for immediate intervention in ensuring affordable electricity to industries in Karachi to save businesses, export production and livelihoods of millions of people.
The associations urged the federal government to instruct the Sui Southern Gas Company (SSGC) to provide indigenous gas to K-Electric (KE) at approved rates from the Oil and Gas Regulatory Authority (OGRA) and ensure that the natural gas allocation policy was followed in letter and spirit.
They were of the opinion that millions of residents in Karachi were being treated with discrimination and injustice which may result in severe fallout for the country’s huge population and its overall economy.
Electricity is becoming increasingly unaffordable for the masses and industrialists of Karachi. If this disparity is not rectified, it is feared that the worsening situation may trigger unemployment that can lead to social backlash across the city.
The representatives of the associations present on the occasion include Federal B Area Association of Trade and Industry, Bin Qasim Association of Trade and Industry, Surjani Association of Trade and Industry, Pakistan Association of Large Steel Producers, Pakistan Association of Automotive Parts and Accessories Manufacturers, Pakistan Tanners Association, All Karachi Ice Factories Welfare Association and Sind Paper Mill Forum.
During the press conference, it was highlighted that high Fuel Charges Adjustments (FCA) are being charged by KE in the monthly bills to industrial and residential consumers from September 2021. The FCA is a pass-through cost, which accounts for variable fuel prices and is charged from end consumers across the city.
They noted that the overall cost of electricity has gone beyond the affordability of consumers of Karachi as the production of electricity was being carried out through RLNG rather than indigenous gas. It was mentioned that the violation of the gas supply priority list is resulting in expensive electricity unit charges for 25 million residents and 40,000 industries of Karachi.
Standing as a gross violation of the decision taken by the federal cabinet committee on energy in 2018 under the chairmanship of Shahid Khaqan Abbasi, the SSGC is currently providing 100MMCFD of RLNG to K-Electric for power production.
During the committee's decision, the gas utility was directed to provide at least 130MMCFD of natural gas to KE. In stark contrast to the decision, the SSGC is currently supplying gas at RLNG rates which increased by 5 times during the past few months, forcing KE to produce expensive electricity. As a result, it is translating into higher electricity bills for consumers which are becoming an unbearable burden.
Recently, K-Electric submitted a petition for an FCA of Rs11.33/KWH for the month of May 2022, which is expected to reflect in the bills of August 2022. With the base tariff increase in electricity prices by the government for the upcoming fiscal year and soaring FCAs, the per-unit cost of electricity for the consumers is expected to touch around Rs48/unit, which is not only intolerable for the residential consumers but also going to enormously increase the cost of doing business for the industrialists.
Surprisingly, the SSGC continues to prioritise gas supply to captive power plants as opposed to the power sector, including K-Electric defying the natural gas allocation and management policy.
Presently, 200 MMCFD natural gas supply is being supplied to captive power plants at the rate of Rs1087/MMBTU and Rs852/MMBTU for zero-rated export industries, which are generating electricity at Rs13/kWh and 11/kWh respectively.
On the other hand, KE is being provided 100MMCFD RLNG at the cost of Rs4,656/MMBTU rather than natural gas pushing the company to produce electricity at an overblown cost, which is set to affect 25 million residents of the city and 40,000 industries.
The Ogra’s approved natural gas to the tune of Rs857/MMBTU is the right of citizens of Karachi to be provided to the Karachi-based power plants, making electricity for them as per the gas supply priority list and Article 158 of the Constitution.
Originally published in The News