KARACHI: Chairperson of the Businessmen Group (BMG) Zubair Motiwala and President of the Karachi Chamber of Commerce and Industry (KCCI) Muhammad Rehan Hanif have opposed Sui Southern Gas Company’s (SSGC) petition to the Oil and Gas Regulatory Authority (Ogra) seeking a sharp increase in gas tariffs for FY2026-27, urging the regulator to reject the proposal in the wider interest of the economy and industrial sustainability.
Commenting on the scale of the proposed increase, the KCCI leadership said the effective hike could reach about 286 per cent when accumulated shortfalls of more than Rs545 billion are included, taking the prescribed gas price to roughly Rs6,855 per mmbtu and lifting the total revenue requirement to around Rs1.28 trillion. They described the demand as unjustified, noting that even on a standalone basis SSGC has sought a 121 per cent increase in prescribed prices to about Rs3,935 per mmbtu, significantly higher than the 21 per cent increase requested by SNGPL.
They said the petition effectively turns gas tariffs into a tool for recovering historical financial inefficiencies rather than reflecting the actual cost of service. Gas throughput has declined by 9.4 per cent, while operating expenses have risen by more than 108 per cent, pointing to weak cost control and operational inefficiencies. Including a cumulative revenue shortfall of nearly Rs956 billion in current tariffs would place an undue burden on consumers, particularly industry, which is already under pressure.
The KCCI leadership also objected to the inclusion of Rs312 billion as interest on Gas Development Surcharge (GDS) receivables, saying it reflects a dispute between SSGC and the federal government and should not be passed on to consumers. They also rejected the inclusion of Rs16.35 billion as a Balochistan revenue shortfall adjustment and Rs2.3 billion for LPG air mix projects, arguing these are policy-related costs that should be funded through the federal budget rather than through tariffs.
Motiwala and Hanif said both SSGC and SNGPL should first identify and address the underlying causes of their financial deficits instead of relying on tariff increases. They pointed to a sharp fall in industrial gas consumption, down by nearly 50 per cent due to unviable pricing, alongside persistently high unaccounted-for gas (UFG), including losses from theft, leakages and inefficiencies, particularly in the domestic segment. Domestic consumption, they said, remains broadly unchanged due to subsidies, creating a distorted structure in which inefficiencies are passed on to industrial consumers.
They also criticised the cross-subsidy framework, under which industrial users effectively subsidise domestic consumers. With domestic tariffs often set well below cost-recovery levels, the subsidy gap, frequently exceeding 85-90 per cent, is recovered from industry, placing additional strain on the productive sector. They said such subsidies should be transparently funded through the federal budget rather than embedded in tariff structures.
They added that the impact of high gas tariffs is already visible in the decline of captive power plants from around 200 to fewer than 80, while many small and medium-sized enterprises are operating below capacity or closing due to high energy costs. Using tariff increases to offset operational and financial inefficiencies risks accelerating industrial contraction and could lead to deindustrialisation, they said.
The business leaders said the trend is also reflected in the external sector, with exports weakening and imports rising, signalling pressure on both export-oriented and import-substitution industries. Elevated energy costs have eroded competitiveness, increasing reliance on imports and widening the trade gap.
They called on the prime minister to intervene and ensure the withdrawal of SSGC’s petition, and to direct the company to submit a revised proposal focused on rationalising tariffs to support industry. Allowing such a steep increase at a time of economic strain raises broader questions about policy direction, they said, warning that further tariff hikes would undermine industrial recovery.
They added that raising tariffs amid falling demand and a struggling industrial base is not a sustainable solution, and stressed that long-term growth depends on rational energy pricing and improved governance in the gas sector.
