Karachi exporters deplore higher RLNG tariff

The export-oriented industries of Karachi have expressed annoyance due to sheer discrimination and dubious conduct on the part of the.

The ministry disregarded the summary approved by the Economic Coordination Committee (ECC) of the Cabinet, which has uniformly approved regasified liquefied natural gas (RLNG) tariff at $6.5/MMBTU all inclusive to the export-oriented sectors during the financial year 2021/22 to apply across Pakistan, Muhammad Jawed Bilwani, chairman of the Pakistan Apparel Forum, said in a statement.

The Ministry of Energy (Petroleum Division), in complete contravention to the government’s export-friendly policy and imperative decision for continuation of concessionary rates of electricity and RLNG to the export-oriented sectors, has issued the Petroleum Division’s advice to implement the ECC decision only to the Sui Northern Gas Pipeline Limited (SNGPL), which is a deliberate attempt to deprive the export-oriented industries in Karachi from the government’s concessional tariff of RLNG at $6.5/MMBTU all inclusive.

The export-oriented industries of Karachi have strongly deplored that the Ministry of Energy has again repeated its discriminatory move, as the rates of RLNG at $6.5/MMBTU all inclusive were also approved during the last financial year 2020/21; wherein, the concessional rates were never applied for the export-oriented industries in Karachi and no such implementation advice was sent to the Sui Southern Gas Company (SSGC) neither previous year nor this year.

Surprisingly, the export-oriented industries of Karachi have been deprived of concessional tariff of RLNG, which generates 51 per cent of the total exports and 55 per cent of the value-added textile exports.

The Karachi exporters want to know the ulterior motives behind such discrimination done by the Petroleum Division towards them.

The Federal Ministry of Commerce is working hard to execute all pragmatic steps and initiatives to support and facilitate the exporters to enhance the national exports, while the Ministry of Energy is creating hurdles, causing negative impact on the cost of manufacturing of export industries in Karachi and depriving a level-playing field.

Several exporters of Karachi have only RLNG connections (no gas connections) and currently, SSGC is charging them RLNG at $12.68/MMBTU.

Such an exorbitant tariff of RLNG for the export industries of Karachi will make it impossible for them to compete when export industries in Punjab will get RLNG at $6.5/MMBTU through SNGPL, the letter noted.

In Karachi, the cost of manufacturing was already higher than in Punjab, water tariff is 525 per cent higher, minimum wage is 25 per cent higher and now RLNG will become 95 per cent costlier. The security and transportation charges further increase the cost of manufacturing.

The Exporters of Karachi felt that both federal and provincial governments want to destroy the export-oriented industry of Karachi, which contributes 60 per cent revenue for the federal government and 95 per cent for the provincial government.

Owing to such adverse and discriminatory policies towards Karachi, some exporters are planning to shift their industries abroad.

The ECC had approved a summary of the Ministry of Commerce regarding “Continuation of concessional rates of electricity and RLNG to the export-oriented sectors” for FY 2021/22 and subsequently ratified by the federal cabinet.

In the summary of the Ministry of Commerce it was agreed that the supply of RLNG may be provided at $6.5/MMBTU to the export-oriented sectors. The Ministry of Commerce vide an office memorandum requested the Ministry of Energy to implement the decisions of the ECC of the Cabinet.

However, the Ministry of Energy has issued controversial advice only to SNGPL, despite the fact that the concessional rates are for the export-oriented industries across Pakistan duly approved by the ECC.

The exporters of Karachi appealed Prime Minister Imran Khan, who is also the Minister-In-charge of the Ministry of Commerce, to intervene and take immediate notice of the non-implementation of the ECC decision by the Ministry of Energy and issued strict orders for the implementation of the decision of concessionary RLNG tariff of $6.5/MMBTU all inclusive across Pakistan.

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