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Gas tariff concession for export sector extended till June

By Israr Khan
June 01, 2023

ISLAMABAD: The government has extended a concessionary tariff of $9 per million British thermal units (MMbtu) for the supply of gas to five export-oriented sectors for the months of May and June 2023, the Ministry of Energy said. A supplementary grant of Rs4.0 billion will be provided to Sui Northern Gas Pipelines Limited (SNGPL) to facilitate the disbursement of a subsidy worth Rs2.0 billion for each of the two months mentioned. The ministry has written an order letter stating that, "based on the actual subsidy claim for the month of April 2023, budgetary savings have been identified for the continuation of the concessionary tariff of US$9/mmbtu for the export-oriented sector till June 2023".

"SNGPL is therefore advised to continue the supply of gas at the concessionary tariff of US$9/mmbtu for the month of May and June 2023 to the export-oriented sector, in line with the ECC decision dated July 25, 2022, while remaining within the budget of Rs2.225 billion."The ministry has also urged SNGPL to ensure uninterrupted gas supply at the concessionary tariff to the export-oriented sector throughout the specified period. The concessionary tariff was withdrawn on April 29 due to the complete exhaustion of the government-allocated subsidy for the supply of gas and re-gasified liquefied natural gas (RLNG) at a subsidized rate.

In line with the earlier notification, the industrial units will continue to receive gas and RLNG at the tariff set by the Oil and Gas Regulatory Authority (OGRA). The decision to reinstate the concessionary tariff is expected to provide much-needed relief to the export-oriented sectors, ensuring their competitiveness and fostering growth in the country's economy.The government had formally decided in August last year to supply electricity at a rate of 9 cents per kWh and RLNG at $9 per MMBtu without any disparity to zero-rated five export-oriented sectors across the country for existing connections till end-June 2023.

Textiles including jute, leather, carpet, surgical, and sports goods will get the energy at regionally competitive rates to reduce the cost of manufacturing and enhance exports. Around 65 percent of Pakistan’s exports come from these five sectors.

It is worth mentioning that Sui Northern Gas Pipelines Limited (SNGPL) purchases LNG from Pakistan State Oil and Pakistan LNG Limited, which procures the gas from international suppliers.