Govt extends gas tariff concession for export sector till June

By
Israr Khan
|
A worker drains water from a gas filter at the Egas processing plant in Gujar Khan, Pakistan March 10, 2017. — Reuters
A worker drains water from a gas filter at the Egas processing plant in Gujar Khan, Pakistan March 10, 2017. — Reuters

  • SNGPL directed to ensure uninterrupted gas supply to export sector.
  • Gas will be supplied at concessionary tariff of $9 per mmBtu in May, June.
  • Textile sector will get energy at regionally competitive rates to enhance exports.


ISLAMABAD: In order to support the export sector, the government has extended a concessionary tariff of $9 per million British thermal units (mmBtu) for the supply of gas to five export-oriented sectors for the months of May and June, The News reported Thursday. 

According to the Ministry of Energy, a supplementary grant of Rs4 billion will be provided to Sui Northern Gas Pipelines Limited (SNGPL) to facilitate the disbursement of a subsidy worth Rs2 billion for each of the two months mentioned. 

The ministry — in a written order — stated that "based on the actual subsidy claim for the month of April, budgetary savings have been identified for the continuation of the concessionary tariff of $9 per mmBtu for the export-oriented sector till June 2023".

"SNGPL is therefore advised to continue the supply of gas at the concessionary tariff of $9 per mmbtu for the month of May and June 2023 to the export-oriented sector, in line with the ECC's [Economic Coordination Committee] decision dated July 25, 2022, while remaining within the budget of Rs2.225 billion," the order read.

The ministry has also urged SNGPL to ensure uninterrupted gas supply at the concessionary tariff to the export-oriented sector throughout the specified period. 

The concessionary tariff was withdrawn on April 29 due to the complete exhaustion of the government-allocated subsidy for the supply of gas and re-gasified liquefied natural gas (RLNG) at a subsidised rate.

In line with the earlier notification, the industrial units will continue to receive gas and RLNG at the tariff set by the Oil and Gas Regulatory Authority (OGRA). 

The decision to reinstate the concessionary tariff is expected to provide much-needed relief to the export-oriented sectors, ensuring their competitiveness and fostering growth in the country's economy.

The government had in August last year formally decided to supply electricity at a rate of 9 cents per kWh and RLNG at $9 per mmBtu without any disparity to zero-rated five export-oriented sectors across the country for existing connections till end-June 2023.

Textiles including jute, leather, carpet, surgical, and sports goods will get the energy at regionally competitive rates to reduce the cost of manufacturing and enhance exports. Around 65% of Pakistan’s exports come from these five sectors.

It is worth mentioning that SNGPL purchases LNG from Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL), which procures the gas from international suppliers.