IMF condition: ECC ready to give green signal to gas tariff hike today

Symbolic image of a person lighting a flame.  - AFP/File
Symbolic image of a person lighting a flame. – AFP/File
  • Tariffs for non-protected domestic consumers could increase by up to 173%.
  • The Petroleum Division will insist on implementing the increase from October 1.
  • If the increase is implemented from today, circular debt will increase by Rs 15 billion.

ISLAMABAD: The Economic Coordination Committee (ECC) will meet today (Monday) to give green signal to the plan to increase gas tariffs, which is a key part of the International Monetary Fund (IMF) conditions, which also include zero increase in gas circular credit. . Report for the ongoing financial year 2023-24 news,

The government is likely to increase local gas tariffs by 173% for non-reserved domestic consumers, 136.4% for commercial, 86.4% for export and 117% for non-export industry.

Since there is no budgetary subsidy even for the domestic, commercial and industrial sectors, high-end consumers will provide cross-subsidies to low-end consumers.

The government’s failure to increase gas prices from July 1 has led to a loss of Rs 50 billion in the gas sector during July-September. But the deficit will be covered if the government goes ahead with the gas tariff hike which will provide enough monetary headroom to recover from the deficit.

According to the publication, the IMF has also been involved in this issue. It has been reported that gas prices will be increased in such a way that it will not increase the circular debt during this financial year, which currently stands at Rs 2.9 trillion.

However, now the petroleum division will try to ensure that the gas tariff hike is implemented from October 1. If the government decides to implement the increase from today, the circular debt will increase by Rs 15 billion.

But there will be no increase in gas tariff from January 1, 2024, further gas tariff hike will be implemented as gas prices are reviewed twice a year under the law.

The cement sector will have to buy 193.3% more gas than the current cost, causing it to bear the biggest brunt from Rs 1,500 per MMBtu to Rs 4,400 per MMBtu.

The CNG sector will face the second-highest increase in gas tariff, which will increase by 143.8% from Rs 1,805 per mmBtu to Rs 4,400.

If the increase is approved, it means that cement prices will skyrocket and CNG will become more expensive than petrol.

However, the government has no plans to increase tariffs for tandoor, which will ensure that roti prices remain stable.

The summary prepared by the Petroleum Ministry, which is to be presented at the ECC meeting today, shows that it has not even spared the four protected domestic consumer categories as apparently it has not proposed an increase in their gas tariffs, but in their The monthly fixed fee has been increased from Rs 10 to Rs 400 per month. month.

More importantly, the Petroleum Division has proposed to increase the fixed charges per month for the first 4 non-reserved domestic consumers by 117.4% from Rs 460 per month to Rs 1,000, thereby reducing their gas tariffs by 50-150%. developed. Additionally, the fixed charges per month for the remaining 4 non-reserved domestic consumers have been increased by 334.78%, from Rs 460 per month to Rs 2,000, resulting in a 100%-173% increase in their gas tariffs.

The summary said that as per the petitions filed by SNGPL in OGRA for revenue, SNGPL is now offering a blend of natural gas and RLNG in the ratio of 20:80 to the non-export industry out of the estimated quantity for industrial consumers, both process and captive. Will do. determination.

The mix offered by Sui companies will be reviewed every quarter depending on the availability of natural gas and RLNG. And as per the petitions filed by SSGC in OGRA for revenue assessment, SSGC will offer a mix of NG and RLNG of 90:10 out of the estimated quantity to industrial consumers, both process and captive.

Talking about the export industry, the summary states that currently, there is a wide price disparity between the industry operating on SSGCL and SNGPL networks. Industry in the North (operating on SNGPL network) consumes 50:50 mix of indigenous and RLNG for 9 months (March to November) and 100% RLNG for 3 months (December to February), which amounts to an average of $9.6 / Is. MMBtu (Rs 2,790) throughout the year.

On the other hand, industries in the south (working on SSGCL) are being charged Rs 1,100/MMBtu on process connections. SSGC has recently started supplying blending ratio of 75:25 for captive use of gas, which is around $5.9/MMBtu (Rs 1,710).

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