Karachi industrialists oppose SSGC gas tariff increase plea

KARACHI: Businessmen Group Chairman Zubair Motiwala has asked the Oil and Gas Regulatory Authority to turn down Sui Southern Gas Company’s petition for its estimated revenue requirement for fiscal year 2026-27, arguing that another increase in gas prices would hurt industry, undermine exports and add to economic strain.

Speaking at a public hearing on the SSGC petition in Karachi on Monday, Motiwala called for a review of the entire tariff framework and urged the regulator not to place the burden of inefficiencies, losses and cross-subsidies from other segments on industrial consumers.

He said industries maintain recovery levels of nearly 98% and should not be made to subsidise domestic users, fertiliser producers and regions with high losses. According to Motiwala, the current structure unfairly shifts the financial weight of weaker-performing segments onto the industrial sector.

Call for structural separation

Motiwala also proposed that SSGC be split into two separate operational entities or boards. He said one should serve industrial consumers only, while the other should handle domestic and subsidised sectors, so that the financial performance and recovery efficiency of each side could be assessed transparently.

He maintained that if industrial consumers were managed separately, the industrial gas business could become commercially sustainable on its own and support lower tariffs through stronger sales volumes and better efficiency.

Objections to projected expenses

During the hearing, Motiwala also sought the immediate removal of what he described as unjustified increases in expenditure included in the petition. He specifically objected to the proposed rise in electricity expenses, travel costs and professional charges.

He questioned the basis for a projected 73% increase in electricity costs, saying industrial gas consumption had fallen significantly, which in turn had reduced compressor operations and electricity usage.

Exchange rate assumption challenged

Motiwala also criticised the exchange rate assumption used in the petition. He said the government had stabilised the rupee at around Rs279-280 against the dollar through consistent economic management, but SSGC had projected the exchange rate at Rs287 per dollar in its calculations.

According to him, this assumption had been used to inflate the company’s revenue requirement.

The objections were raised as part of the public hearing process on SSGC’s estimated revenue requirement for FY2026-27, with Motiwala pressing Ogra to reject the request and revisit the broader tariff structure affecting industrial consumers.

He said the industrial sector should not be penalised despite maintaining strong recovery performance, and urged the regulator to adopt a structure that reflects the actual cost and efficiency of different consumer segments separately.