In a move aimed at meeting the conditions set by the IMF, the ECC of the Cabinet has given the green light to a substantial hike in gas prices, reaching up to 35.13 percent.
In a move aimed at meeting the conditions set by the International Monetary Fund (IMF), the Economic Coordination Committee (ECC) of the Cabinet has given the green light to a substantial hike in gas prices, reaching up to 35.13 percent.
Chaired by the Federal Minister for Finance, the ECC convened to deliberate on the summary presented by the Petroleum Division regarding the “Natural Gas Sale Pricing FY 2023-24 (Effective – 1st February 2024)”. This decision comes just a day before the IMF deadline, underlining the urgency of compliance with international financial obligations.
According to sources familiar with the matter, the ECC has approved an average increase of 35.13 percent in gas tariffs for consumers in Punjab, Khyber Pakhtunkhwa (KP), including Islamabad. Meanwhile, consumers in Sindh and Balochistan will witness an average increase of 8.57 percent in gas tariffs.
The approved tariffs for Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) stand at Rs 1673.82 per MMBTU and Rs 1466.40 per MMBTU, respectively, reflecting significant increases from previous rates.
Furthermore, the Ministry of Petroleum has proposed adjustments in tariff slabs for domestic consumers, with protected consumers facing increases ranging from Rs. 80 to 100/MMBTU, while unprotected consumers may see gradual increments ranging from Rs. 200 to 300/MMBTU.
Special attention has been given to the commercial sector, with proposals to revise tariffs for Bulk Domestic and Special Commercial (Roti Tandoor) categories. The proposed tariff for Bulk consumption is set to rise from Rs. 2,000/MMBTU to Rs. 2,900/MMBTU, while a flat tariff of Rs. 700/MMBTU is recommended for the Special Commercial category, which has remained unchanged since 2015.
The gas pricing revisions extend to industrial consumers as well, with adjustments proposed for Engro Fertilizer, Fauji Fertilizer Bin Qasim, and other plants receiving Re-Gasified Liquefied Natural Gas (RLNG) from SNGPL. The effective date for revised gas tariffs for Engro Fertilizer is slated for 1st March, 2024.
Additionally, the ECC has approved the abolition of existing export and non-export categories, with tariffs for the CNG sector also set to be revised.
In light of these decisions, it is emphasized that the revision of gas prices/tariffs must align with the revenue requirements of the Sui companies, ensuring financial sustainability and viability in the energy sector.
The approval of these gas price increases underscores the government’s commitment to meeting IMF mandates and addressing fiscal challenges, albeit with potential repercussions for consumers and industries reliant on natural gas. As these adjustments take effect, stakeholders will closely monitor their impact on the economy and the broader energy landscape.