Minister of State for Petroleum Musadik Malik said on Tuesday that the government will have to increase the price of gas, reported Aaj News.

In a Senate meeting, he said gas was currently being sold at “unsustainable rates” in Pakistan.

Fuel talks with Russia begin today

“Debate is underway to determine the extent of hike in gas price,” he said. “In the current situation, the government cannot provide new gas connections to consumers.”

The minister’s comments come as the 9th review of the International Monetary Fund (IMF) to clear the release of the next tranche of funds to Pakistan has been pending since September. The country faces a severe economic crisis with its central bank foreign reserves falling to a critical level of less than $4.5 billion.

Pakistan’s power regulator has already allowed Sui Northern Gas Pipeline Ltd (SNGPL) and Sui Southern Gas Company (SSGC) to hike rates up to 75%, subject to cabinet approval.

This rise in gas prices, a major source of electricity generation, will increase the cost of production for industries that are likely to pass on the impact to the end consumer. This will add to the already high inflationary pressure, which remains well above 20% for several months and may accelerate the rate of economic slowdown, say experts.

Meanwhile, Pakistan is set to hold bilateral talks with a Russian delegation on Tuesday, for a long-term oil and liquefied natural gas (LNG) trade deal and the construction of the $3 billion Pakistan Stream Gas Pipeline (PSGP) project.

Earlier, Aaj News reported that the purchase of crude oil and petroleum products at a 30% discount from Russia will be discussed and talks on the purchase of gas will also be held.

If Pakistan is able to secure deals at discounted rates, this would allow the cash-strapped country save to the tune of $2 billion on an annual basis, the report added.