Motiwala Links Declining Exports to Gas Shortage

Chairman Businessmen Group (BMG) & former President Karachi Chamber of Commerce & Industry (KCCI) Zubair Motiwala has said that Pakistan needs to increase exports but instead it is constantly declining because of unavailability of gas to industry.

“How could the government expect from exporters to deliver and compete with Bangladesh and India when they have no gas. We are capable of enhancing the exports by 50 percent or $15 billion within the installed capacity but this can only be achieved when gas is available at required quantum and quality along with competitive price,” he said while speaking at a Public Hearing organized by Oil & Gas Regulatory Authority (OGRA) in a local hotel on Monday.

The hearing was presided over by Chairman OGRA Masroor Khan along with Member Oil Zain-ul-Abideen Qureshi and Member Finance Mohammad Naeem Ghori to take inputs about SSGC’s petition seeking tariff hike.

While referring to the Energy Year Book of Pakistan and Economic Review of Bangladesh, Chairman BMG said that Bangladesh gives 34 percent gas to its industries whereas in Pakistan, only 21 percent gas was given to the industries.

“Yet we are blamed for being unable to enhance the exports, which is unfair as we are being asked to deliver without realizing the ground realities. In Bangladesh and India, domestic consumers are not the first priority but it is the industry that gets gas on top priority and it is the basic reason of more exports of these countries.”

He was of the opinion that ill-planned gas priority chart was the main cause for all the economic issues being faced by the country as it was all due to this chart which gives first priority to the domestic users instead of industries which happens nowhere around the world.

“We provide gas to 29 percent of the country’s population as the rest of 71 percent use other conventional sources for their domestic heating needs. However, gas to the industries is denied that also bear the highest cost of gas, as the domestic users pay only 30 percent cost and fertilizer sector pays 15 percent while the remaining is completely footed by the industries.”

Zubair Motiwala said that Pakistan was going through worst financial crisis as the exports were going down, home remittances have also descended by 9 percent, inflation was high and no money was available for imports.

It is a matter of grave concerns that around 7,000 applications are still pending approvals by the State Bank for imports of essential items including machinery parts, raw materials and solar equipment, etc., which have led to terribly affecting the production activities of industries.

Criticising the SSGC’s petition for carrying calculations about its revenue shortfall and expenditures which have been estimated at a dollar value of Rs231, Chairman BMG stated that the Finance Minister Ishaq Dar has assured time and again that he would bring down dollar to less than Rs200 and it was currently hovering around Rs220 so 15 percent difference was already there and more was likely; hence, the SSGC should trust the Finance Minister’s word and accordingly come up with estimates for its expenditures.

He also questioned SSGC’s plans to lay pipelines that he said was not making any sense as the industries have already closed down due to unavailability of gas so why these pipelines were being laid when there was no gas. Instead of laying new pipelines, SSGC should replace old and rusted pipelines to save gas from leakages and bring down the exorbitant unaccounted for gas (UFG) losses.

Showing deep concerns over 19 percent UFG losses, he said that these losses include losses incurred in Balochistan, Sindh, Karachi’s industries, commercial and domestic users but it was really worrisome that the entire burden of all the UFG losses was shifted on the industries only wherein these losses were less than 5 percent. Underscoring the need to segregate the domestic users from industries, he appealed Chairman OGRA to seek details of the precise losses being faced by SSGC in supplying gas to industries and domestic consumers.

“No gas is supplied to domestic users in Dubai, Abu Dhabi, Qatar, Mumbai, where gas is provided either via bousers or cylinders which is the only way to bring down the exorbitant UFG to a very low level.

Although the international standard for UFG is 2 to 3 percent but we can bring it down to 5 to 6 percent if similar practice is adopted here, as well, and the domestic users are segregated from industrial consumers”, he added.

He further pointed out that SSGC, in its petition, has also mentioned the impact 25.47 inflation but this was food inflation, not the core inflation which stood at 11.3 percent; therefore, SSGC should take core inflation into account to evaluate the impact. “SSGC has also filed previous years’ losses which had already been denied by OGRA. If the same issue has once again been brought, it means that SSGC is challenging OGRA’s denial”, he opined.

Zubair Motiwala further stated that SSGC gets 110mmcf gas from Sui which is enhanced to 200 mmcf during the winter season while the SNGPL takes away 280 mmcf gas from Sui but unfortunately, it does not contribute a single molecule of gas to deal with the increased demand for gas in Balochistan during the winter season and the entire burden is shifted on SSGC which needs to be rationalized and burden must be distributed in proportion to the amount of gas being taken by SSGC and SNGPL from Sui.

While concluding his remarks, Chairman BMG stressed that SSGC may need to raise its tariff but this increase should be logical and it must be borne equally by the domestic, commercial, fertilizers and the industrial sectors.

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