Gas price hike brings Sindh-Punjab energy cost disparity to the fore

The latest increase in gas prices seems to have pitched the industrialists of Punjab against those of Sindh. Newspaper ads by the All Pakistan Textile Mills Association-North demand that the government do away with different gas rates for the export-oriented industrial units of Punjab and Sindh by adopting a uniform price of $7 per million British thermal unit (mmBtu). After the latest hike, Punjab-based industrialists are supposed to pay $9 per mmBtu, which is almost three times higher than the gas rate enjoyed by their Sindh-based counterparts. “It’s unsustainable to supply gas to Sindh-based industrialists at (nearly) $4 per unit. Charging such a low rate makes no sense because industrialists are already competitive at $9 per unit,” Optimus Capital Management Ltd Chairman Asif Qureshi told Dawn on Tuesday. For reference, Mr Qureshi cited the average gas rate for Bangladesh’s export sector, which is about $8.50 per unit. The disparity in the price of energy puts Punjab-based industrialists at a cost disadvantage, he said. “The export industry gets taxed on its turnover, not profit. So all the excess profits arising out of the energy cost savings will go straight into the pockets of Sindh-based industrialists,” he said.