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Gas Tariff FY 2020-21 needs to PROPEL Exports, Jobs, FEX

Sui Southern Gas Company Limited (SSGCL) has filed its annual Petition with OGRA to increase the FY 2020-21 Average Prescribed (Sale) Rate (Rs/mmbtu), subsequently rates in all the categories except domestic, colonies and Tandoor. OGRA held public hearing on 25-Jun-2020. The interveners (exporters, CNG, Chambers, Associations) requested OGRA and SSGCL to take Covid-19 situation in account, like other countries governments and public serving utilities are giving much needed relief. Gas tariff is a great tool to make Pakistan a strong industrial power. It may not retard Exports in the coming years.

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The gas tariffs are NOT just Numbers. The Situation is not ‘business as usual’. Out of box solutions are needed today. In this era of Covid-19, lock down, melt down, the gas prices have colossal bearing upon: (a) National security (b) in-country peace (c) Job security (d) Exports safeguard (e) Foreign Exchange Earnings (f) Strengthening of Pak Rs to US$ (f) Livelihood sustainability (g) Sustainability of SSGCL (h) over economy. We need to find out what rest of the world, competition and neighbors are doing, which SSGCL had no homework done. Wellhead Gas price, LNG, ROA, Capex, Opex, management systems are not sustainable. This Tariff exercise and OGRA hearing are not about Arithmetic but Law, Logic and Livelihood. SSGCL is a single service provider therefore, it needs to serve the public at large.

The gas sale price to Export Oriented Textiles for FY 2020-21 may be fixed at Rs 450/MMBTU (Rs 757.80 FY 2019-20).
Export Analysis

: In Ready Made Garments), BD is No:3 in the top ten; while Pakistan has no place in that league. Textiles is Pakistan’s forte, yet it in nowhere on world map.

2011 Total Exports: Pak $24.439 Billion ……… BD $25.383 Billion

2018 Total Exports: Pak $23.485 Billion ……… BD $39.252 Billion

2018 Pak Textiles Exports $ 13.6 Billion

2018 BD Textiles Exports $ 32.0 Billion

2018-19 (9 months) Pak Textile Exports: $ 12.313 Billion Total: $ 21.225 Billion

2019-20 (9 months) Pak Textile Exports: $ 11.567 Billion Total: $ 19.800 Billion

 

Gas tariff for export oriented industry:
  • FY 2019-20 Pak Rs 757.80/mmbtu or $ 4.78/mmbtu
  • FY 2019-20 BD Tk 10/Cubic Meter or $ 3.75/mmbtu
  • FY 2020-21 Pak Rs 885.73/mmbtu or $ 5.21/mmbtu (this will devastate Exports)
  • FY 2020-21 Pak Rs 450/mmbtu or $ 2.65/mmtbu (Recommended to regain)

SSGCL Gas Tariff need to be used for Export earnings, job, FEX built up and national security. IT IS NOW OR NEVER SITUATION to get the export market share and survive. In case, the Government agrees to the industry proposals then within 5 years the Textile exports can jump to $ 26 Billion.

In case, the Government agrees to the industry proposals then within 5 years the Textile exports can jump to $ 26 Billion.

Pakistan needs to capitalize on its best trait to grab the post Covid Opportunities and that is Textiles. Only Textile can make Pakistan the Forrest Gump and bring massive employment and FEX in the near future and years to come to match the targets of the Prime Minister. Already in the international export arena the countries (especially competitors of Pakistan) are going out of way to grab lost markets and exploring new markets. Export oriented Countries are subsidizing, reducing utility (Power & Gas) expenditure to position themselves into the international markets, especially US, Europe. Pakistani textile like other countries got a heavy jolt during that last 6 months with cancellation of large orders. Now is the time for Pakistan to take back the market share and that can only be done on fast track basis by the Textile industry.

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