KATI Rejects Gas Levy, Citing Flawed Cost Analysis

KARACHI: The Korangi Association of Trade and Industry (KATI) has firmly rejected the proposed Gas Transition Levy on captive power consumers, criticizing it as unjustified and based on flawed cost estimates. The association’s president, Mohammad Ikram Rajput, voiced concerns over the policy’s impact on industry and economic stability.

According to a technical report by KATI, even if gas prices reach Rs 3,500 per MMBTU, the cost of generating power through captive plants surpasses that of electricity from the national grid under the B3 industrial tariff. Rajput argued this indicates the objective of discouraging captive generation has been met, rendering the levy unnecessary.

Rajput condemned the estimation method supporting the levy as “fundamentally flawed,” leading to inflated cost comparisons and misguided decisions. He warned that implementing the levy without sound analytical backing could undermine industrial confidence and destabilize the energy market.

He called on the Sui Southern Gas Company (SSGC) and the Oil and Gas Regulatory Authority (OGRA) to defer implementing the levy and review the estimation process with stakeholder consultation. Rajput highlighted the abundance of gas supply and financial losses suffered by gas companies, questioning the rationale behind making gas unaffordable.

Industries in Karachi are already strained by high electricity and fuel costs, Rajput noted, and further financial pressure could negatively affect production, exports, and employment. He emphasized the link between energy prices, national competitiveness, and economic growth, cautioning against policy decisions based on unverified data.

Rajput reiterated KATI’s dedication to collaborating with policymakers and regulators to foster transparent and equitable energy sector reforms.