SNGPL refrained from charging textile industry high gas tariff

LAHORE: The Lahore High Court has given interim relief to as many as 78 textile units against the high gas tariff introduced by the government and directed the Sui Northern Gas Pipelines Limited (SNGPL) to issue revised bills at concessional tariff of $6.5/mmbtu.

The petitioners had challenged the increase in gas tariff before the Lahore High Court and respondents in the case included federation of Pakistan, Oil and Gas Regulatory Authority (OGRA), and Sui Northern Gas Pipelines Limited (SNGPL).

Representing the textile industry, Salman Akram Raja and Malik Kashif Rafique Rijwana submitted that petitioners were textile industrial units which were also involved in generation of electricity for self-consumption, but did not sell the surplus. Therefore, they do not fall within the definition of “captive power unit” as per law settled by the honourable Supreme Court in judgment dated March 21, 2019 in Civil Appeals.

Counsels further submitted that petitioners have been treated as captive power units and instead of applying concessional tariff of $6.5/mmbtu, they have been charged $9/mmbtu under the revised tariff dated November 30, 2021.

They further submitted that in connected matters notices have already been issued and interim relief granted; hence they prayed for the same relief.

Lahore High Court Judge Muhammad Sajid Mehmood Sethi during the proceedings, ordered to issue notices to the respondents and hear the petition along with connected matters on January 19, 2022.

As interim relief has already been granted in the connected matter, therefore, to maintain consistency, till the next date of hearing, the respondent SNGPL was directed to issue revised bill to the petitioners at concessionary rate of $6.5/mmbtu within a period of two days, which should be deposited by the petitioners within the next three working days.

It was worth mentioning that the textile industry, disappointed at the massive jump in gas prices, decided to challenge the upward revision to avoid negative implications.

According to recent correspondence with members, All Pakistan Textile Mills Association (APTMA) noted that the government increased the rate of regasified liquefied natural gas (RLNG) from $6.5 to $9/mmbtu for export-oriented sectors.

Stakes are very high particularly for the industry located in Punjab as continuous gas supply at $6.5/mmbtu to entire value chain, as approved by the cabinet till June 2022, is the only workable energy source for their viability and competitiveness viz a viz regionally and rest of the country.

According to a study, the much-hyped Regionally Competitive Energy Tariffs (RCET) policy has been termed vital for the domestic textile sector’s competitiveness, as the economic significance of the textile sector in Pakistan was undeniable due to holding a lion’s share in the country’s exports.

The sector contributes over 60 percent in the total export earnings and provides employment opportunities for around 40 percent of the labour force.

The recent success of the textile sector could partially be attributed to the RCET policy adopted by the government in late 2018. Under the RCET policy, the government offers a regionally competitive RLNG/gas tariff at the rate of $6.5/mmbtu, beside similar concessional power tariff. In August this year, the present government extended a mix of local gas and RLNG to export-oriented industry throughout the country.