Industrialists accuse SSGC of providing pricey gas

KARACHI: The industrial sector of Karachi and Sui Southern Gas Company (SSGC) Monday entered into heated debate over the LNG price for the industries and Unaccounted for Gas (UFG) losses with SSGC chief declaring to halt gas supply to industries if they don’t need LNG.

During the public hearing of Oil & Gas Regulatory Authority (Ogra) over the SSGC petition for review of its estimated revenue requirements/ prescribed prices for FY2023-24, industries representatives blasted the gas utility company for burdening the industries in Karachi with pricey LNG. 

They charged that the SSGC raised LNG price without having the mandate of fixing the rates and was also charging the UFG losses of Balochistan from the industries in Sindh. “We can’t sell LNG bought at a high price from the international market at lower rates,” SSGC CEO Imran Maniar said and added that it was not possible that industries are provided LNG on domestic rates.

He even asked the industrials that the SSGC can halt gas supply if they don’t need LNG. Later, talking to The News, the SSGC CEO 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 LNG price is Rs4,000 per mmbtu.

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

He said that fertilizer sector is making the profits but being provided subsidised gas. Zeeshan Bashir, another industry representative, said that gas price has been increased. In August the imported and domestic gas share in the energy mix was 25 and 75 percent and now it is being revised to 40 and 60 percent, 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 the domestic gas. He said that it was the SSGC’s hard work that industries were running even in month of December because of provision of gas.

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

While speaking with reference to the SSGC review petition filed before Ogra, Imran Maniar said that at the hearing the company has estimated exorbitant losses from Balochistan region. The recent increase in gas tariff would increase Balochistan consumers’ monthly gas bills to Rs90,000 a month for many, while 65 percent of the consumers in the province are having income of Rs25,000 or less. Therefore, the company would end up making heavy losses if it is not allowed recovering 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 determinate what would be 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 projected indigenous gas UFG at 12.62 percent i.e. 40,026 MMCF in which Balochsitan UFG is at 57.68 percent i.e.22,566 MMCF versus benchmark of 7.6 percent.

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.