Karachi's industry sector accuses SSGC of providing gas at high rates

• Industrial sector says SSGC didn't have mandate to fix rates. 
• SSGC CEO refuses to sell gas bought at high prices at low rates. 
• Asks industrials if SSGC could halt supply if they didn’t need it.

KARACHI: The industrialists of Karachi accused Sui Southern Gas Company (SSGC) of burdening the industrial sector with pricey LNG without having the mandate of fixing the rates, The News reported Tuesday. 

The accusations were made during a public hearing of the Oil & Gas Regulatory Authority (Ogra) over the SSGC petition for review of its estimated revenue requirements/prescribed prices for FY2023-24. 

The industrial sector also entered into a heated debate over the LNG price for the industries and unaccounted-for gas (UFG) losses with the SSGC chief declaring to halt gas supply to industries if they don’t need LNG.

The industrialists said that the SSGC raised LNG prices without having the mandate of fixing the rates and was also charging the UFG losses of Balochistan from the industries in Sindh. 

However, SSGC CEO Imran Maniar said: “We can’t sell LNG bought at a high price from the international market at lower rates." He added that it was not possible to provide LNG to industries on domestic rates. 

He even asked the industrials if the SSGC could halt gas supply if they didn’t need LNG. Later, talking to The News, the Maniar said that the company bought the two spot cargo at a high price compared to domestic gas as the domestic gas tariff for the industries is Rs2,100 per MMBTU and the LNG price is Rs4,000 per MMBTU.

Prominent businessman Zubair Motiwala, while speaking on behalf of the industrialists, said that industries are closing down and Ogra should take cognisance of it as industries are suffering because of cross-subsidy to fertiliser and domestic sectors.

He said that the fertiliser sector was making profits but being provided subsidised gas. Zeeshan Bashir, another industry representative, said that gas prices have been increased. In August the imported and domestic gas share in the energy mix was 25 and 75% and now it is being revised to 40 and 60%, which would not be feasible for the industry.

The SSGC CEO said that if the industries didn’t want to take LNG then it would have to take the limited availability of domestic gas, adding that it was the SSGC’s hard work that industries were running even in the month of December because of the provision of gas.

He also dispelled the impression that UFG losses of Balochistan were being charged from the industries in Karachi.

While speaking regarding the SSGC review petition filed before Ogra, Maniar said that at the hearing the company had estimated exorbitant losses from the Balochistan region. The recent increase in gas tariff would increase Balochistan consumers’ monthly gas bills to Rs90,000 a month for many, while 65% of the consumers in the province having an income of Rs25,000 or less. Therefore, the company would end up making heavy losses if it is not allowed to recover shortfall in the revenue from other consumers.

Ogra Chairman Masroor Khan said that domestic gas reserves are depleting and LNG is imported for domestic needs. “We have to accept it that imported gas is costly and this is the decision of SSGC to determine what would be a blend of imported and domestic gas,” he added.

Earlier, SSGC in its petition projected a revenue shortfall of Rs47.773 billion or Rs.226.18 per MMBTU for natural gas consumers and Rs18.13 billion or Rs39.23 per MMBTU for RLNG consumers.

The petition noted that the projected indigenous gas UFG is at 12.62% i.e. 40,026 MMCF in which Balochsitan UFG is at 57.68% i.e.22,566 MMCF versus a benchmark of 7.6%.

It said that overall UFG disallowance has been worked out at Rs16.378 billion whereas UFG disallowance of Balochistan alone has been estimated at to be Rs20.15 billion.

“The UFG disallowance of Balochistan should be allowed as revenue shortfall in Balochsitan on the overall companywide UFG disallowance,” it said.