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Print Print 2023-10-31

Gas tariffs increased

  • The drastic devaluation of rupee against dollar has resulted into increasing cost of gas
Published October 31, 2023

ISLAMABAD: Federal government on Monday approved increase in price of natural gas for different categories of the consumers as advised by the Oil and Gas Regulatory Authority (OGRA) with effect from 1st November 2023.

The Economic Coordination Committee (ECC) of the Cabinet earlier on 23rd October 2023 considered the summary submitted by the Petroleum Division and approved the increase in the natural gas prices. The Federal Cabinet in its meeting held on 30th October, 2023 referred back the summary for reconsideration of the ECC.

The ECC in its meeting held on 30th October 2023 approved the revised natural gas prices. The rapidly dwindling natural gas reserves at 5-7 percent per year burdening the national gas basket with more expensive imported fuel (LNG).

Industry rejects gas tariff hike

The drastic devaluation of rupee against dollar coupled with general inflation which has increased cost of gas exploration, production, distribution and transmission have resulted into increasing cost of gas.

The previous governments retained control of pricing a scarce commodity instead of strengthening the regulator and creating strong internal controls in the system for transparency and efficiency.

Inadequate gas pricing in the previous governments and no financing for the imported gas diversion over the years dented the national exchequer and created a circular debt stock of PKR 2.1 trillion (without interest).

In the name of affordability, some of the most profitable businesses of the country are availing the cheapest natural gas. This has unduly enriched certain sectors while depriving lowest income class including poor farmers and small-scale industries.

The pricing decision has been a very difficult one for the caretaker government. The affordability objective had major clash with the sustainability argument of the supply chain. It is known that the country is under the IMF programme which has abolished subsidies of all sorts.

The last price increased, wef, January 2023 was the first increase in the last two and a half years. The inadequate action resulted in an increase of Rs 461 billion in FY22-23 only.

In case the caretaker government does not proceed to increase prices as per OGRA’s advice and fund the RLNG diversion to domestic segment in absence of subsidies, there shall be a further addition in circular debt of around PKR 400 billion.

The main objectives have been sustainability for the supply chain i.e., no circular debt flow in true sense, devising practical and targeted affordability; especially the protected consumers and businesses and maximizing accessibility to gas for those who can efficiently use it.

Being the urban phenomenon, only 30 per cent households of Pakistan are availing piped gas and the remaining population of the country is either using LPG in cities and town and biomass, wood and cow-dung in rural areas with some exceptions.

The 57 per cent of the domestic gas connections fall in the protected category where there is no increase in gas price.

Fixed bill of only Rs400 per month is being introduced. It is still ensured that the monthly bill of protected class does not exceed Rs900 on a consumption of 0.9 hm3 in a month.

For unprotected categories, tariff is increased on a progressive basis with higher income households paying higher tariff. This is to ensure that middle income households are not burdened unnecessarily.

The government has completely unchanged the sale price for gas supplies to Roti Tandoors because Roti is prime and foremost necessity.

The fertilizer prices are kept in line with Mari gas field’s cost of gas which is Rs580 per mmbtu, only a Rs70 increase over the previous price just not to affect the farmers getting urea and ensure food security.

The industry tariffs are set so as to rationalize the gas prices in North and South region and create a level playing field for everyone.

Petroleum division in consultation with stakeholders has developed a Regionally Competitive Energy Tariff (RCET) considering the industry in India, Bangladesh and Vietnam, which have developed themselves and emerged as net exporters.

Copyright Business Recorder, 2023


Comments are closed.

Tariq Qurashi Oct 31, 2023 09:34am
Well that is the end of any forests Pakistan has left. They will all be chopped down for firewood.
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KU Oct 31, 2023 10:58am
Flabergasted at the ECC decision, not the increase in prices but their foolish explanations on price rise and their unwise plans to work out prices for low-income households from high-income ones, obviously a sham. The reality is that ECC is mentally challenged and doing most of what they can with the handicap they suffer from. Meanwhile, and as usual, industry and agriculture continue to suffer while ECC or SIFC are only enjoying their time till the convicted king is returned to power and brings out a grand scheme to quench the corrupt thirst of wagging tongues.
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Kamran Oct 31, 2023 10:58am
But Gas is home grown , dollars not applicable here.
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Cool boy Oct 31, 2023 11:01am
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Cool boy Oct 31, 2023 11:53am
Fruits of imported gas are now starting to appear.... Burn local coal and biomass.... No more imported gas
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Cool boy Oct 31, 2023 01:37pm
@Kamran, gas is local but the company extracting is foreign. So no dollars no gas
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Farooq Oct 31, 2023 02:34pm
@Aamir Memon, network ka boht issue Rahat hy. System link down rahta hy
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Humayun Oct 31, 2023 02:40pm
Why does this article read like from some Gov apologist
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شاھد خان Oct 31, 2023 03:25pm
شاید آپ لوگوں کو ایسا لگ رہا ہیں ۔ کہ یہ جو وسائل ہیں ۔یہ آپ لوگ بلا معاوضہ عوام کو دے رہے ہیں ۔ اور آپ ہر پاکستانی پر احسان کر رہےہیں ۔ تو یہ بات بلکل غلط ہے ۔ کیونکہ یہ سب معدنی وسائل حام مال آپ انہیں چھوٹے قصبوں اور دیہاتوں سے نکال کر یہ تاثر دیتے ہیں ۔کہ یہ قومی وسائل ہیں ۔ جنہیں آپ لوگ بڑے شہروں کو منتقل کرکے دوبارہ انہیں چھوٹے قصبوں اور دیہاتوں کے لوگوں مہنگے ترین داموں میں فروخت کرتے ہیں ۔ اور آیے روز آپ ٹیکس پے ٹیکس ڈال رہے ہیں ۔ پھر بھی محکمے حسارے میں جارہے ہیں ۔ تو یہ آپ لوگ سوچیئے کہ کہاں اور کون زیادہ گیس بجلی وغیرہ استعمال کرتے ہیں ۔ اور چوری کہاں ہو رہی ہیں ۔ دل تو کرتا ہے ۔ کہ سب کچھ بیان کرو ۔ لیکن آخر میں ایک بات آپ لوگوں سے کہوں کہ اپنے شاہی چرچے کم کرو ۔ عمر بن خطاب رضہ کی طرح اپنی زندگی کو اللّٰہ تعالیٰ کے بندوں کے لئے وقف کردو ۔ جب آپ کا سسٹم ٹھیک ہو جائے ۔ پھر مجال ہے ۔ کوئی قومی وسائل لوٹیں۔ لیکن اس کے لئے خمت چاھئے جو آپ سب ہم سب میں نہیں ۔ اپ لوگ ہم لوگ ایسے ہی سلوک کے قابل ہیں ۔ از خود راشد بن شاہد بن ملک بن غدک بن شیر حسن خان ۔
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Ghareeb Awam Oct 31, 2023 03:49pm
Long Live the Caretakers! They take good care of themselves and of those who brought them in power. You know what I mean.
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yasir waheed Nov 01, 2023 06:59am
shame on pakistani govt doub maro
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Zahid Nov 01, 2023 11:19am
Let move to caves man pakistan is growing up cave culture. No bijli no gas no water
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