Cabinet Approves Gas Price Hike for Captive Power Plants

The federal cabinet has decided to increase gas prices for captive power plants to $2.5 per MMBtu.

According to the details, the federal cabinet approved the increase in gas prices for captive power plants following the recommendations of the Petroleum Division.

According to the official documents, it was decided that captive power plants would get gas at $9 per MMBtu instead of $6.5 for every designated unit of gas. The document states that the Cabinet approved to maintain the price of gas for the export industry, while it decided to maintain the price of $6.5 per MMBtu for the general industry.

The Cabinet was informed in the briefing that gas production in the country is declining by 9 percent every year, and LNG prices are increasing.

The briefing said that it is difficult to maintain an uninterrupted supply of gas during winters as the demand for domestic power and fertilizer sectors has increased in the current winter season, and LNG has to be imported regularly to ensure supply.

It should be noted here that gas prices have been increased for a pre-determined period from 15 November 2021 to 31 March 2022.

The price hike has been attributed to the spike in oil and gas prices at the international market and the illegal use of gas in some sectors.

The RLNG rate for different units of the exports sector units will remain unchanged ($6.5 per MMBtu). To avoid misuse of the scheme, the government had decided to take the subsidy back from the industrial sector till March 31, 2022, as the gas crisis is likely to ease as the winters pass.