The IMF was told last month there will be a revision in natural gas tariffs come July 1, 2015. It came and went, without any notification or even indication of a notification regarding revised gas tariffs. Recall that gas tariffs, which are supposedly a biannual affair, were last touched two years ago. Any attempt in that territory, ever since, has been resisted, mostly based on political compulsions, despite the IMFs restlessness.
So has the IMF been fooled - yet again? The earlier such attempts to delay gas price notifications were at least seen coming. Earlier Letter of Intents to the IMF had a mention of rationalizing gas tariffs, but the latest one on June 12, 2015, had a specific date for which the revised gas tariffs were to be implemented. One can safely say the Fund would not be too amused with yet another delay.
In its April 2015 country report on Pakistan, the IMF in no uncertain words made its concerns over the delay known. "Staff expressed concerns about this delay and urged the authorities to reconsider unification of determination and notification with the regulator-Oil and Gas Regulatory Authority (OGRA)," read the report.
Losses in gas sector have been mounting in the recent past and have reportedly surpassed those in the power sector. Gas tariff rationalization should be Pakistans need and is not merely IMFs structural benchmark conditionality.
Someone now needs to answer what has stopped the authorities from notifying a revised tariff. Will it only be used in the IMF reports and the letters written to them from Pakistani authorities? During all the hype of everything mega - such issues carrying more significance have taken a backseat. Surely, the IMF too, is not overly bothered as this does not really hamper their client capacity to repay. It will continue remain "an area of grave concern" on which "the authorities are making efforts".
Mind you, revised prices, if it ever happens, will be applied in retrospect. The authorities have time and again hinted that the loss in recovery incurred by gas companies due to delayed price notifications will be fully recuperated in the new tariff.
So the consumers will suddenly have to pay for someones yesteryears recklessness.
Surely, when the government can be so swift in levying all kinds of surcharges and cess to keep the revenue coming, there must be a way to plug this gap and actually move on.
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