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National interest should dictate gas distribution

The industrial sector has urged the political elite to consider national interest in gas distribution instead of opting for populist solutions which have done away with thousands of existing jobs.

Chairman All Pakistan Textile Mills Association Ahsan Bashir said that it has been proved internationally through creditable research and analysis that power generation should be given preference in supplying gas over all sectors as doing so makes the economic process downstream efficient.

“The next priority in every economy except Pakistan is industry as its sustained operations increase economic growth and provide jobs,” he said. “If industry closes for any reason jobs vanish immediately,” he said. Further, reducing industrial jobs by giving gas priority to less important sectors is suicidal for the economy, he said. Bashir also said that the next priority in gas supply is for commercial purposes only followed by domestic consumers. Transport, he added, should be the last priority and that too only when it comes to public transport. In neighboring India only public transport had access to natural gas, said Bashir. Chairman Energy Committee of the federal government Gohar Ejaz said the energy crisis could be resolved immediately without financial loss to the consumers. “We are in a deep economic crisis and need accelerated growth and exports to come out of the woods,” he said.

He added that the CNG sector was consuming 500 mmcfd gas daily at the national level and 280 mmcfd in terms of the SNGPL network. He said that the government was providing Rs50 billion subsidy on CNG by keeping its rates 40 percent below petrol rates (on BTU basis). On the other hand, the government was providing power sector subsidy of Rs250 billion and fertiliser sector subsidy worth Rs50 billion, he said.

“This cumulative subsidy worth Rs300 billion could be wiped out immediately if the 500 mmcfd gas being supplied to CNG was diverted to industry,” he said, adding that this measure should at least be applied for three winter months. In order to compensate the CNG users the government should reduce the rate of petrol to Rs80 per liter which would involve a subsidy of Rs100 billion per annum or Rs25 billion for three months.

“This measure would decrease the import of furnace oil and the import bill by $3.8 billion at current global rates,” he said. In addition, the entire power sector and fertiliser subsidies would be done away with. “The urea rates in the country would decrease by at least 30 percent while there will be no need to import urea worth a billion dollars each year,” he said.

Chairman APTMA Punjab Shahzad Ali Khan said this prudent solution would revive the economy. He conceded that 30,000 CNG workers operating at 300 CNG stations would lose their jobs. They could be compensated through a government subsidy at least during the winter months, he said. Full gas supplies to industries would revive 40 percent of the closed units in almost every industrial sector.

Moreover, an exportable surplus of $4 billion would be available for global markets and at least two million employees would get back the jobs they lost due to closing of industrial units. This plan would pave the way for new investment.

Energy sector expert Mohsin Syed said that the statistics clearly show that immediate energy needs of the country could be addressed by giving gas supply priority to the power sector and industry.

“The CNG sector should be accommodated by importing LNG and pumping it into the SNGPL and SSGC systems. The gas rates for all sectors could be increased on the basis of weighted average of domestic natural gas and imported LNG,” he said.

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