Export-oriented industries of Karachi are highly annoyed at the ‘sheer discrimination and dubious conduct’ of the Ministry of Energy, as they accuse the Ministry of disregarding the summary approved by the Economic Coordination Committee (ECC) of the federal cabinet which set the tariff of re-gasified liquified natural gas (RLNG) at $6.5 per MMBtu, all-inclusive, for the export-oriented sectors to apply across Pakistan during the financial year 2021-22.
The stakeholders argued that the Ministry of Energy (Petroleum Division) was in complete contravention of the government’s export-friendly policy and imperative decision about the continuation of concessionary rates of electricity and RLNG for export-oriented sectors. They blamed that the Ministry issued the Petroleum Division’s advice to implement the ECC decision only to Sui Northern Gas Pipeline Limited (SNGPL), which was a deliberate attempt to deprive the export-oriented industries in Karachi of the government concessional tariff.
Chairman Pakistan Apparel Forum Muhammad Jawed Bilwani warned that due to such ‘adverse and discriminatory policies’ toward Karachi, some exporters were planning to shift their businesses abroad.
The exporters said that the export-oriented industries of Karachi strongly deplored that the Ministry of Energy (Petroleum Division) again repeated its ‘discriminatory move’, as the rates of RLNG were also approved during last financial 2020-21, wherein the concessional rates were never applied to export-oriented industries in Karachi and no such implementation advice was sent to SSGCL — neither last year nor this year.
The export industry players in Karachi claimed that they had been deprived of the concessional tariff of RLNG which generated 51% of the total exports and 55% of the value-added textile exports. “The exporters of Karachi want to know what are the ulterior motives behind such discrimination done by the Petroleum Division toward the exporters of Karachi,” they said.
“The Federal Ministry of Commerce is working hard to execute all pragmatic steps and Initiatives to support and facilitate the exporters in order to enhance the national exports,” while on the other hand, the stakeholders claimed, “the Ministry of Energy (Petroleum Division) is creating hurdles, causing a negative impact on the cost of manufacturing of export industries in Karachi. Several of our member exporters of Karachi only have RLNG connections (no gas connections) and currently, SSGCL is charging them RLNG @ $12.68 per MMBtu.”
Furthermore, they argued that how, with such an exorbitant tariff of RLNG, the export industries of Karachi will compete when export industries in Punjab get RLNG at $6.5 per MMBtu through SNGPL. They maintained that in Karachi, the cost of manufacturing was already higher than that in Punjab, while the water tariff was 525% higher and the minimum wage was 25% higher. They added that the RLNG tariff will become 95% higher now, while the security and transportation charges further increased the cost of manufacturing. The Karachi exporters said it seemed as if the federal and provincial governments wanted to destroy the exports and the Karachi industry that contributed 60% revenue for the federal government and 95% for the provincial government.
ECC approved a summary of the Ministry of Commerce in respect of “Continuation of Concessional Rates of Electricity and RLNG to export-oriented sectors” for the FY 2021-22 and subsequently, it was ratified by the federal cabinet. In summary of the Ministry of Commerce, it was agreed that the supply of RLNG may be provided at $6.5 per MMBtu to export-oriented sectors. Ministry of Commerce vide Office Memorandum requested the Ministry of Energy (Petroleum Division) to implement the decisions of the ECC of the Cabinet.
However, according to Karachi’s export players, the Ministry of Energy (Petroleum Division) has issued controversial advice only to SNGPL despite the fact that concessional rates are for export-oriented industries across Pakistan duly approved by ECC of the cabinet.
The stakeholders concluded that “Prime Minister of Pakistan, who is also the Minister-In-charge, Ministry of Commerce is appealed to intervene and take immediate notice of the non-implementation of the decision of ECC of the Cabinet by the Ministry of Energy (Petroleum Division) and strict orders shall be given to implement the decision of concessionary RLNG tariff $6.5 per MMBtu, all-inclusive, across Pakistan”.
