JUST SHUDDER AS TO WHAT WILL HAPPEN THIS RAMADAN

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).

On Monday, to complete prior actions as per IMF conditionalities, the government jacked up the price of natural gas by up to 124 percent for all domestic and commercial consumers. This price hike will also be applicable to the power sector and fertilizer and CNG stations across the country.

The government has already approved a significant increase in electricity prices by up to Rs15.5 per unit for all residential and commercial consumers and exporters.

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.

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