LAHORE: The Presidential candidate of the Federation of Pakistan Chambers of Commerce & Industries’ (FPCCI) upcoming election for 2024 Muhammad Ali Sheikh has called for keeping check on soaring energy prices, as the recent jump in gas prices will lift the average Consumer Price Index further, hitting all sectors of the economy.
Muhammad Ali Sheikh said that the government had increased gas tariff with effect from this month 2023 just before the first IMF review under the $3 billion short-term loan program. This is the second gas price increase in 10 months.
The gas price hike is a condition attached to the loan program. It may pave the way for the release of second IMF tranche of $700 million.
Calling for reverting the decision, he said that the industries that may resort to price increase include fertilizer, cement and steel, which will make agricultural production and construction material more expensive.
The inflation forecast is higher than the State Bank of Pakistan’s projection of 20-22 percent. The central bank governor has said that the expected gas price hike has been incorporated into the inflation forecast.
Muhammad Ali Sheikh said that feed and fuel stock prices are forecast to increase to Rs580 per million British thermal units (mmbtu) from the current price of Rs510, and to Rs 1,580 per mmbtu from the current price of Rs 1,500, respectively.
Earlier, the Oil and Gas Regulatory Authority (OGRA) had notified revised gas prices in February 2023 for consumers of Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL), after which Fauji Fertilizer Bin Qasim Limited (FFBL) and Engro Fertilizers jacked up fertilizer prices.
As per proposed revised gas tariff for other categories of gas consumers, the gas price for bulk consumers is proposed to be raised from Rs 1,600/ mmbtu to Rs 2,000/mmbtu, while the gas price for special commercial (Roti Tandoor) will remain the same at Rs697/mmbtu and gas price for commercial consumers is proposed to go up from Rs 1,650/mmbtu to Rs 3,900/mmbtu.
Similarly, gas tariff for Liberty Power is proposed to increase from existing Rs 2,406/mmbtu to Rs 3,890/mmbtu while the gas price for Liberty Power is based on HSFO linked formula and not fixed by the government. Likewise, gas price for fertilizer plant of FFBQL (feed) is proposed to be increase from existing Rs510/mmbtu to Rs580/mmbtu while no change in gas price for Engro is proposed as Engro Fertilizer Ltd (new plant) has a claim of extended period for feed gas concessionary tariff of $0.7/mmbtu due to non-supply of gas by SNGPL and Sindh High Court has granted stay order to maintain the status quo.
However, gas price for fertilizer (fuel) is proposed to be increase from existing Rs 1,500/mmbtu to Rs 1,580/mmbtu. Furthermore, gas price for cement category of gas consumers is proposed to be revised from existing Rs 1,500/mmbtu to Rs 4,400/mmbtu. He informed that the gas price for export industry (process and captive) is proposed to be revised from existing Rs 1,100/mmbtu to Rs 2,050/mmbtu and the gas price for non-export industry (process and captive) is proposed to be increased from existing Rs 1,200/mmbtu to Rs 2,600/mmbtu.
Also, the gas price for the category of CNG is proposed to be revised from Rs 1,805/mmbtu to Rs 4,400/mmbtu. Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL) are public sector gas utility companies licensed from Oil and Gas Regulatory Authority (OGRA) for purchase, transmission, distribution and sale of gas to consumers in the country.
BMP nominated candidate of the president observed that for the past one and half year, the country is facing a serious financial crunch and continually relying on borrowing to meet its financial needs. He emphasized that persistent fiscal deficits has resulted in consistently high annual gross financing needs, averaging 27 percent of GDP over the past decade.
Copyright Business Recorder, 2023