Petroleum Division Orders SNGPL to Supply Gas Without Subsidy to Export Oriented Sectors

The Petroleum Division has ordered Sui Northern Gas Pipeline Limited (SNGPL) to supply non-subsidized gas to five export-oriented sectors. The government hasn’t budgeted any subsidy for five export-oriented sectors during the fiscal year 2023-24, which means that SNGPL should supply 50:50 system gas and RLNG in March-November while 100 percent in the remaining months with subsidy. Last week, textile players asked the government for competitive energy and gas rates to support the industry. However, their appeal was in vain, with the authorities citing strict terms of the International Monetary Fund (IMF). Still, the textile industry is optimistic about better results due to a stronger cotton harvest in Punjab this season. In June, the All Pakistan Textile Mills Association asked for the resumption of gas and electricity supplies at cheap rates, warning that failing to do so would result in unemployment, a loss of export earnings, and further deterioration of the trade balance. The association’s Patron-in-Chief Gohar Ijaz had then requested Prime Minister Shehbaz Sharif to restore Regionally Competitive Energy Tariffs (RCET) for exporters. Pertinently, RCET is not dependent on any subsidies and is about the same as the cost of service. The subsidy results from the NEPRA tariff structure. The APTMA warns that a lack of affordable energy rates could result in the closure of 75 percent of Punjab’s industrial businesses within the next three months. The Association is of the view that the continued suspension of RCET would not be restricted to large-scale manufacturing but could also impact small and medium enterprises (SMEs) and other small businesses.