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SITE Association criticises 26% increase in gas prices

Staff Report

KARACHI: SITE Association of Industry has expressed concern on a news report that the Sui Southern Gas Company (SSGC) has requested the Oil and Gas Regulatory Authority (OGRA) to increase gas prices by 26 percent.

Chairman SITE Association, Salim Parekh said SSGC in its request suggested OGRA to increase gas prices by 9 percent from July 1, 2009 while 17 percent hike to be undertaken from January 1, 2010.

He strongly criticised the move of SSGC to OGRA for increasing gas prices by 26 percent. He said, “All this is being done with the consent of the government. It seems as if the government is least concerned about the industries in Pakistan and wishes to convert this country into a Consumer Society”.

Such a move at this juncture is totally uncalled for and negates the assurances given to the business and industrial communities of facilitations, he added.

The industry, at the moment, is facing severe crisis and is struggling to survive. The exports are going down, unemployment is steeply rising to record heights, cost of doing business and cost of manufacturing is at its peak, industries are closing down and the flight of capital is evident.

The chairman and the executive committee members of SITE Association has raised the question as to why gas prices have not been decreased in proportion to the decrease in the oil prices when they had hit the high of $147 per barrel. They maintained that it is evident that while the gas company resorts to price increases on the basis of increase in international oil prices, no steps are taken to decrease it when oil prices are down low to $35 per barrel. The gas prices were increased by 31 percent on the eve of the oil prices touching the highest level of $147 per barrel in the month of July 2009. Subsequently, the government also further notified an addition of 7 percent increase in gas price.

The gas tariff prior to notify with effect from July 1, 2009 was 339.43 per MMBTU and the same notification was reduced by about 4 percent. When OGRA gave decision on May 15, 2009 it took into consideration the Expected Revenue Receipts (ERR) on the gas company.

On ERR basis there should be further reduction of 10 percent on the notified gas tariff of Rs 324.30 per MMBTU but OGRA did not pay heed to it, resultantly the industries are paying higher rates.

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