ECC okays up to 124% gas tariff hike to unlock IMF loan

— Residential consumers will pay more bills than commercial, industrial 

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved an increase of up to 124% increase in gas prices to meet one of the prior conditions of the International Monetary Fund (IMF).

Finance minister Ishaq Dar chaired the meeting of ECC. The Ministry of Energy, Petroleum division has informed the ECC to revise gas price for residential and other categories of consumers which would generate a revenue of Rs 310 billion as against apportioned RERR for six-month January to June 2023 of Rs 305 billion.

Gas price for non-protective domestic consumers would be Rs400 from Rs300 upto 1hm3,  Rs600 from Rs500 upto 1.5hm3, Rs 800 from Rs553 upto 2hm3, Rs1100 from Rs738 upto 3hm3, Rs2000 from Rs1107 upto 4hm3 and Rs3100 from Rs1460 above 4hm3.

The proposed sales prices for commercial consumers would be Rs121 up to 0.5hm3, Rs350 from Rs300 up to1hm3, Rs730 from Rs553 up to 2hm3, Rs1250 from Rs738 up to 3hm3, Rs2250 from Rs1107 up to 4hm3 and Rs3270 from Rs1460 above 4 hm3.

Sources said that the government has put more burden on residential consumers comparable to commercial or industrial consumers as there are five slabs for domestic consumers where prices have been increased by up to 124%.In addition, the gas prices for the fertilizer sector increased from 22% to 103% due to which the electricity prices would also be increased in coming months. Whereas the gas prices for Export or non-Export sectors have been increased from 10 to 34%.

Petroleum division informed the ECC that OGRA issued its determination of Estimated Revenue Requirements (ERR) for FY 2022-23 on June 30, 2022 for both SNGPL and SSGC. According to the said determination, SNGPL required a revenue of Rs.261 billion and SSGCL required a revenue of Rs.285 billion in FY 2022-23.

OGRA did not allow previous years’ revenue shortfalls in the ERR of both the gas companies. Pursuant to Section 8(3) of the OGRA Ordinance 2002, Government was required to advise OGRA to revise the consumer gas prices in accordance with Government policy with effect from 1st July 2022 within 40 days of determination of OGRA. However, the revision in consumer gas prices could not be done as of date. Due to price inaction, the Sui companies have already carried the revenue shortfall for the past six months i.e., July to December 2022.

G-20 Debt Service Suspension Initiative (DSSI)

The Ministry of Economic Affairs presented a summary on G-20 Debt Service Suspension Initiative (DSSI). This debt relief was announced in April 2020 for IDA eligible countries to mitigate the socio-economic impact of Covid-19. Under this initiative debt relief was extended through the suspension of principal and interest payments. So far, 37 debt rescheduling agreements with 15 creditor countries have been signed. Foregoing in view, the ECC allowed the Ministry of Economic Affairs to sign a debt rescheduling agreement with Russia for debt suspension of Covid related amount US$ 14.53 million.

Poverty Alleviation, Social Safety

The Ministry of Poverty Alleviation and Social Safety presented a summary on enhancement of the BSIP budget. The meeting was briefed on the on-going BISP programmes including Unconditional Cash Transfer (UCT) Programme “Benazir Kafaalat” covering around 9 million families, two Conditional Cash Transfer  (CCT) programmes namely Benazir Taleemi Wazaif and Benazir Nashonuma.

Besides, This disbursement of cash assistance to affectees of floods as emergency relief of Rs. 25,000/- was provided per affected family to around 2.7 million families. In the Conditional Cash Transfer Programme, there has been accelerated enrolments in Benazir Taleemi Wazaif and it is anticipated that additional 1 million children will be enrolled by the end of June, 2023.

Also the BISP has extended CCT Benazir Nashonuma to all the districts of the country. The ECC after discussion granted Rs. 40 billion as Technical Supplementary Grant to BISP to meet its budgetary requirements for increase in the unconditional and conditional grants.


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