Gas tariff set to increase by up to 100%

Sources say new rates would be applicable from Oct 1 after the cabinet’s approval

By
Our Correspondent
|
In this file photo taken on October 14, 2021, in Dortmund, western Germany, flames of a lit burner of a gas stove are pictured. — AFP
In this file photo taken on October 14, 2021, in Dortmund, western Germany, flames of a lit burner of a gas stove are pictured. — AFP

  • Summary for new gas tariffs finalised, sent to ECC for approval.
  • Gas sector’s circular debt reached Rs2,700 billion.
  • Up to 1 mmBtu usage price to go up from Rs2,000 to Rs3,500.


KARACHI: The gas tariffs are set to go up by up to 100% for different categories of consumers in line with the conditions of the International Monetary Fund (IMF) to control the mounting circular debt, The News reported on Tuesday.

According to the report, the summary for new gas tariffs has been finalised and submitted to the Economic Coordination Committee (ECC) for approval.

Sources said that once the summary sailed through the ECC, it would be submitted to the federal cabinet. “The new rates would be applicable with effect from Oct 1 after the federal cabinet’s approval,” they said.

The gas sector’s circular debt has reached Rs2,700 billion. 

According to the proposal, up to 1 mmBtu usage price to go up from Rs2,000 to Rs3,500. The sources noted that circular debt would increase by Rs46 billion if gas prices were not hiked by the end of the current financial year and the shortfall of the companies will be in the vicinity of Rs185 billion.

The proposal encompasses a substantial adjustment in fixed monthly charges for protected gas consumers.

Under the plan, it is expected that domestic consumers will be burdened with a hefty 100% increase in gas charges, while other consumers might face a proposed hike of 198.33%.

These tariff adjustments are part of the caretaker government’s strategy to address the persistent circular debt issue and fulfill commitments to the Fund, the sources said.

They said the decision would naturally fuel inflation in Pakistan, which is already at a record-high level thanks to the constant increase in fuel and energy tariffs, resulting in higher food prices, however, the gas price hike is a key condition of the IMF programme. 

As the new tranche is to be released in November, the gas sector’s circular debt reduction is a must under the IMF condition, which can be done only through a hike in gas prices.