KARACHI: Chairman of the Businessmen Group Zubair Motiwala and President of the Karachi Chamber of Commerce and Industry Muhammad Rehan Hanif have voiced strong opposition to the Sui Southern Gas Company’s petition for a substantial tariff increase. The petition, submitted to the Oil and Gas Regulatory Authority, proposes a significant hike in gas tariffs for the fiscal year 2026-27, raising concerns about economic and industrial sustainability.
According to Karachi Chamber of Commerce and Industry, the proposed tariff hike could reach an alarming 286 percent when accounting for shortfalls exceeding Rs. 545 billion, potentially pushing the prescribed gas price to approximately Rs. 6,855 per MMBTU. This would inflate the total revenue requirement to around Rs. 1.28 trillion. The KCCI leadership criticized the demand as unjustified, highlighting that even a standalone increase would see SSGC seeking a 121 percent rise in prescribed prices to about Rs. 3,935 per MMBTU, a figure significantly higher than the 21 percent increase requested by SNGPL.
The KCCI emphasized that the petition effectively turns gas tariffs into a mechanism for recovering historical financial inefficiencies, noting a 9.4 percent decline in gas throughput contrasted by a more than 108 percent rise in operating expenses. They argued that incorporating a cumulative revenue shortfall of nearly Rs. 956 billion into current tariffs unfairly burdens consumers, particularly the industrial sector.
The chamber leaders also objected to the inclusion of Rs. 312 billion as interest on the Gas Development Surcharge receivables and other policy-related costs, arguing these should be covered by the government budget rather than consumers. They called for transparency from SSGC and SNGPL in addressing financial deficits, pointing to inefficiencies in gas consumption and the impact of cross-subsidies requiring industrial consumers to subsidize domestic users.
Motiwala and Hanif highlighted the detrimental effects of high tariffs, such as the reduction in captive power plants and the struggles of small enterprises. They warned that the current trajectory could lead to deindustrialization, with industries facing closure due to unaffordable tariffs. They noted the impact on Pakistan’s external sector, with increased imports and declining exports, stressing that high energy costs have rendered domestic production uncompetitive.
In light of these issues, they have appealed to the Prime Minister to intervene and ensure the withdrawal of SSGC’s petition, advocating for a revised proposal that rationalizes and reduces gas tariffs. They stressed the importance of rational energy pricing and improved governance for sustainable economic growth, arguing that increasing tariffs amidst declining demand and industry struggles is not a viable solution.
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