Gas Subsidy to Captive Power Discriminatory and Unjust: Industrial Associations

Eight industrial associations of Karachi collectively denounced the decision to supply Captive Power Plants with subsidized indigenous gas, terming it a violation of the Gas Allocation Policy 2018. They revealed that this was the real reason behind the exorbitant Fuel Charges in electricity bills, as in the face of gas shortages, SSGC was left with no alternative but to supply extremely overpriced RLNG to K-Electric.

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“Increasing Fuel Charge Adjustments (FCA) are being charged by the Karachi Electric on account of RLNG being used for generation instead of local gas. Meanwhile, cheaper gas is being diverted towards the influential captive power producers who profit at the expense of consumers of Karachi. This is why electricity has gone beyond the affordability of consumers of Karachi,” explained Rehan Javed, Advisor to various Industrial associations of Karachi on Power, Chairman of Sind Paper Mills Forum, and a keen analyst on the national power sector and its challenges.

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He further elaborated, “Per the federal cabinet committee decision on energy in 2018, SSGC was directed to provide at least 130 MMCFD of natural gas to KE. In contempt of this decision, SSGC is currently supplying KE with 100 MMCFD RLNG which is 5 times more expensive. This is why KE will charge FCA of Rs. 11/kWh from the people of Karachi. Combined with the Government’s increase in electricity tariff, this means that ordinary people of Karachi will pay Rs. 48 per unit of electricity while the rich captive power owners pay Rs. 13 per unit. This is a discrimination against the poor masses.”

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Members of the other associations concurred with Rehan, calling the violation of the Agreement a complete disparity and injustice. Haroon Shamsi, president of the Federal B Area of Trade and Industries further urged the Federal Government to immediately intervene and instruct SSGC to provide the indigenous gas to KE at OGRA approved rates, warning that continued violation of the natural gas allocation policy would result in the closure of business, unemployment, and misery among the people.

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