Caretaker Minister for Energy and Petroleum Muhammad Ali on Tuesday said the government’s decision to raise gas tariffs will stop circular debt from growing and mitigate inflation and interest rates.
Speaking at a press conference alongside Information Minister Murtaza Solangi, the energy minister said the decision to raise gas tariffs was a painful but necessary step.
The minister said the Oil and Gas Regulatory Authority’s (OGRA) income requirement for this year is Rs. 697 billion and Rs. 210 billion for diversion of Re-gasified Liquid Natural Gas (RLNG). He argued that the Sui companies would have suffered losses north of Rs. 400 billion if the gas rates remained the same.
| Amount in PKR | |
| Revenue requirement by OGRA | 697 billion |
| Additional gas: 14 mmcfd | 8 billion |
| RLNG diversion to domestic segment | 210 billion |
| Revised Revenue requirement | 916 billion |
For long, the government was unable to establish new reserves due to substantial losses, which forced the country to rely heavily on imported fuel. This, coupled with a rising fiscal deficit due to costly import payments spiked interest rates and inflation. According to the interim minister, the ongoing efforts of the caretaker government will help reduce inflation and cut interest rates.
Ali further opined that the circular debt would have swelled to Rs. 2.48 trillion if gas tariffs were left unchanged.
Addressing the woes of the common man, the minister said the government has helped the protected and middle-class segments. For unprotected consumers, the tariff has been revised marginally while those in the higher-income category will pay more.
He remarked that all industries in both the North and South would receive gas at the same rates, thus creating a level playing field for everyone.
Notably, the Economic Coordination Committee (ECC) in an emergency meeting on Monday approved the revised natural gas tariff for Export as well as CNG sectors.
ECC approved Rs. 2,400 per MMBtu gas tariff for captive and Rs. 2,100 for the process export industry.
ECC has approved Rs. 2,500 per MMBtu from Rs. 1,200/MMBtu for the non-export industry. Meanwhile, ECC also approved Rs. 3,600/MMBtu gas tariff for the CNG sector. Earlier, it approved Rs. 4,400/MMBtu for the CNG sector.
Earlier, ECC on the recommendation of the petroleum division had approved a gas tariff for the export industry from Rs. 1,100 to Rs. 2,050 captive as well as the process export industry.
The increase in the price of natural gas, as advised by OGRA, will be effective from 1st November 2023 (tomorrow).
