Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Rehan Hanif have expressed strong opposition to the Sui Southern Gas Company’s (SSGC) petition to the Oil & Gas Regulatory Authority (OGRA) for a significant increase in gas tariffs for FY 2026–27. They urged the regulator to reject the proposal in the interest of the economy and industrial sustainability.
The KCCI leadership highlighted that the proposed increase could reach 143 percent when considering accumulated shortfalls, pushing the gas price to approximately Rs. 3,428 per MMBTU and inflating the total revenue requirement to around Rs. 640 billion. They deemed this demand unnecessary and unjustified, noting that, on a standalone basis, SSGC has sought a 61 percent price increase to about Rs. 1,968 per MMBTU, which remains markedly higher than the 21 percent sought by SNGPL.
They emphasized that the petition turns gas tariffs into a means of recovering historical financial inefficiencies rather than representing actual service costs. Despite a decline in gas usage by 9.4 percent, operating expenses surged by more than 108 percent, highlighting significant cost control issues. Embedding a revenue shortfall of nearly Rs. 478 billion into current tariffs unfairly burdens consumers, especially the industrial sector, which is under stress.
KCCI leadership also objected to including Rs. 156 billion as interest on Gas Development Surcharge (GDS) receivables, stating this financial dispute between SSGC and the federal government should not be transferred to consumers. They also rejected including Rs. 8.175 billion for Baluchistan revenue shortfall adjustment and Rs. 1.15 billion for LPG air mix projects, asserting these costs should be borne by the government instead of industrial consumers.
Zubair Motiwala and Rehan Hanif stressed that both SSGC and SNGPL need to transparently address the root causes of their financial deficits rather than relying on steep tariff increases. The significant decline in industrial gas consumption, which has dropped by nearly 50 percent due to unviable pricing, remains a critical concern. High Unaccounted-for-Gas (UFG) incidents, including theft and leakages, particularly in the domestic sector, continue to persist, distorting market dynamics.
They criticized the current cross-subsidy framework, under which industrial consumers subsidize domestic gas users. Domestic tariffs often remain far below cost recovery, leading to recovery of the subsidy gap from industrial users, which exceeds 85 to 90 percent, placing a heavy financial burden on the productive sector. They argued that such subsidies should be funded through the federal budget rather than being embedded in tariff structures.
The impact of high gas tariffs is evident, as seen in the drastic reduction of captive power plants from around 200 to fewer than 80 and the distress of thousands of small and medium enterprises reliant on gas. If prices are increasing to offset inefficiencies, it reflects a flawed approach that will exacerbate industrial contraction, leading toward deindustrialization.
In light of these concerns, Zubair Motiwala and Rehan Hanif appealed to the Prime Minister to intervene, seeking withdrawal of SSGC’s petition and urging the company to submit a revised proposal focused on rationalizing and lowering gas tariffs to support industrial sustainability. Allowing such disruptive tariff proposals during a time of severe industry stress raises critical questions about policy direction.
