ISLAMABAD: The caretaker government is all set to raise the gas prices by up to 100 per cent for different categories of consumers, sources say, thus meeting one of the main conditions set by the International Monetary Fund (IMF).
The sources say a summary has been drafted for tabling before the Economic Coordination Committee (ECC) and the new rates would be applicable with effect from Oct 1 after the federal cabinet’s main body approves the move.
In case the prices are not raised, the gas sector’s circular debt will increase by Rs46 billion by the end of the current fiscal year’s end, the sources added.
This decision will naturally further fuel inflation in Pakistan, which is already being sustained at the record-high level thanks to the constant increase in fuel and energy tariffs, resulting in higher food prices.
They further said from July-September, 2023, the gas companies have added Rs46 billion more to their overall losses.
The summary for the hike has been ‘prepared’ and is likely to be presented before the next meeting of the Economic Coordination Committee (ECC).
Prior to this, it emerged that the government would increase the gas tariff for the fertilizer-producing sector.
Under the new pricing model, the fertilizer sector is expected to experience an increase in gas tariffs to approximately Rs580 per MMBtu for feedstock purposes. The gas would be made costlier for fertilizer fertilizer-producing sector by Rs278 per MMBTu, the sources said and added that the new rate of gas would be Rs1,580 MMBTu.
The talks for the second tranche of the International Monetary Fund (IMF) bailout will likely be held in the last week of October.
Sources say that while domestic consumers may face a 100 per cent increase in gas charges, for commercial consumers it could increase by almost 200 per cent – a threefold increment.
These proposed hikes are part of the caretaker government’s strategy to address the circular debt issue and meet its commitments to the IMF.
According to sources within the finance ministry, failure to adjust gas prices could result in a potential shortfall of Rs185 billion. Furthermore, neglecting to increase Re-gasified Liquefied Natural Gas (RLNG) prices for domestic consumers might lead to a deficit of Rs21 billion.
Insiders suggest that by the end of the current financial year, there is a strong likelihood that the gas sector’s revolving debt could increase by Rs46 billion. With winters almost here, it seems the common person’s woes will increase if the governemnt approves the proposal, especially considering the recent hike in LPG gas prices too.