Image default

Govt elevates gas prices up to 124 percent to reduce circular debt

ISLAMABAD (Eshfak Mughal):- The Economic Coordination Committee (ECC) of the Cabinet has elevated gas prices 10 to 124 percent for all sectors to generate Rs.310 billion as additional revenue instead of tackling unseen losses in second half of the current fiscal year for curtailing the circular debt in compliance of prior conditions agreed with the International Monetary Fund.

The ECC  met under the chairmanship of Finance minister Ishaq Dar here on Monday.

The Ministry of Energy, Petroleum division has informed the ECC to revise gas price for residential and other categories of consumers which would generate a revenue of Rs 310 billion as against apportioned RERR for six-month January to June 2023 of Rs 305 billion.

The gas sale price for protective domestic consumers up to 0.25hm3 would be Rs121 MMBTU, Rs150 upto 0.5hm3, Rs200 up to 0.6hm3 and Rs250 upto 0.9hm3.

Meanwhile, the gas price for non-protective domestic consumers would be Rs400 from Rs300 upto 1hm3,  Rs600 from Rs500 upto 1.5hm3, Rs 800 from Rs553 upto 2hm3, Rs1100 from Rs738 upto 3hm3, Rs2000 from Rs1107 upto 4hm3 and Rs3100 from Rs1460 above 4hm3.

The proposed sales prices for commercial consumers would be Rs121 upto 0.5hm3, Rs350 from Rs300 up to1hm3, Rs730 from Rs553 up to 2hm3, Rs1250 from Rs738 up to 3hm3, Rs2250 from Rs1107 up to 4hm3 and Rs3270 from Rs1460 above 4 hm3.

Similarly, government has also increased gas price for commercial users by 29% from Rs1283 to Rs1650/mmbtu, for exporters by 34% to Rs1100/mmbtu, for general industries up to 13.9% to Rs 1200/mmbtu, for CNG up by 32% to Rs 1805/mmbtu and for cement companies up by 15% to Rs 1500/mmbtu.

Sources said that the government has put more burden on residential consumers comparable to commercial or industrial consumers as there are five slabs for domestic consumers where prices have been increased upto 124 percent.

In addition, the gas prices for the fertilizer sector increased from 22 percent to 103 percent due to which the electricity prices would also be increased in coming months.

Whereas the gas prices for export and non-export sectors were increased from 10 percent to 34 percent.

Petroleum division informed the ECC that OGRA issued its determination of Estimated Revenue Requirements (ERR) for FY 2022-23 on June 30, 2022 for both Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Pipeline Limited (SSGC). According to the said determination, The SNGPL required a revenue of Rs.261 billion and SSGCL required a revenue of Rs.285 billion in FY 2022-23.

OGRA did not allow previous years’ revenue shortfalls in the ERR of both the gas companies. Pursuant to Section 8(3) of the OGRA Ordinance 2002, Government was required to advise OGRA to revise the consumer gas prices in accordance with Government policy with effect from 1st July 2022 within 40 days of determination of OGRA.

However, the revision in consumer gas prices could not be done as of date. Due to price inaction, the Sui companies have already carried the revenue shortfall for the past six months i.e., July to December 2022.

Dr Abid Qayyum Sulehri, an economic expert says that the price hike in natural gas was very necessary for sustainability of the sector otherwise the government was not able to provide gas to the consumers due to losses.

He said that the both gas supplier companies were facing deficit of Rs229 billion during the current fiscal year. The government will fill the gap through jacking up the gas price.

Dr Sulehri said that the unseen losses of the gas sector should be tackled through administrative measures.

Related posts

SECP registers 2,414 companies in February 2023


Staff-Level Agreement with IMF is expected next week, Ishaq Dar


SECP pledges to continue to promote gender diversity


Leave a Comment