SITE President Terms gas rate hike unviable for SMEs

KARACHI: President, SITE Association of Industry Muhammad Kamran Arbi, has termed the current gas rate hike disastrous & unviable for SMEs (Small & Medium Enterprises) that form the backbone of Industrial production. He further said that the current economic situation does not have room for absorption of this rate increase.

Giving statistics of gas supply to industries, he said that industries are already suffering from shortage of gas. Gas supply by SSGC to Industries is just over 350 mmcfd which is roughly 10%-12% of total gas available, but this sector is bearing the brunt of cross subsidies being doled out to other sectors. He expressed concerns over the massive cross subsidy given to the Fertilizer sector at the cost of the entire industrial sector.

Kamran Arbi added that these rate hikes and policy seem to ensure that Capacity Charges in Electricity tariff will increase exponentially as gas tariff policy is encouraging new RLNG connections for Electricity Generation. Large scale industries will opt for these connections to fulfil their requirements instead of grid electricity, which is contrary to the government’s objective to increase Electricity offtake from the grid.

He said that all measures announced to curtail Circular Debt are financial in nature whereas there was no announcement to control UFG or recover long overdue bills from domestic and other sectors. Sudden and immediate price hike will also lead to an immediate liquidity crisis for all Industries which will cause serious issues in the running of businesses as cost will double and impact will be immediate.

“Despite rate hikes and assurances of RLNG injection we fear we would still be starved for adequate pressures and supplies of gas in SITE as the SSGC network here is very old and dilapidated” stated the President SAI.

Kamran Arbi suggested that rate hike should be staggered over a few quarters and has appealed the government to enhance the scope beyond just Gas and include Water and Electricity (particularly long pending and budgeted subsidy on Incremental Usage) in its scope as well so the level playing field can be ensured for Industries in the South region too.