The caretaker government in Pakistan is considering a gas tariff increase that may impact high-end consumers while aiming to protect low-end users from the impending price surge. The International Monetary Fund (IMF) has linked the gas tariff hike to the option of allowing electricity consumers to pay their bills in three-month installments.
Currently, discussions within the Petroleum Division reveal a plan involving 12 slabs for domestic gas consumers. The first four slabs, covering those who use up to 0.9 cubic meters (HM3) of gas monthly, may see no tariff increase. However, the remaining eight domestic gas categories, particularly non-protected consumers, could face price hikes. High-end consumers exceeding the 4 HM3 slab might experience substantial increases in their tariffs, possibly reaching Rs3,600-3,700 per MMBTU.
This potential tariff adjustment could affect around 60% of consumers, with increases ranging from 200 to 400 per MMBTU. The government's move comes as they grapple with the challenge of selling imported RLNG at Rs3,700 per MMBTU while maintaining an average selling price of Rs1,100 per MMBTU, which is no longer sustainable.
The government, along with regulatory bodies and financial divisions, is working on finalizing the gas price increase scenario, aiming for a substantial rise of 45-50% without affecting protected domestic categories. The IMF has exerted pressure on the caretaker government to announce the gas price hike, which was previously determined by the Oil and Gas Regulatory Authority (OGRA) for Sui Southern and Sui Northern consumers in June 2023.
While discussions continue, the government is exploring ways to increase gas production and boost oil and gas exploration activities to address the challenges posed by depleting gas fields and the crippling circular debt in the energy sector."