The cabinet, headed by Prime Minister Anwaarul Haq Kakar, approved a up to 172% increase for domestic consumers, 137% increase for commercial consumers and 193% increase in prices for cement manufacturers with effect from November 1.
The cabinet referred back the proposed increases for processing units of non-export and export industries, captive power plants of non-export and export industries and the compressed natural gas (CNG) consumers to the Economic Coordination Committee (ECC) of the Cabinet for further deliberations.
The cabinet decided that if the ECC develops consensus on the rates for these categories, it should be deemed as approved by the federal cabinet, Mohammad Ali, the federal minister for energy, said.
Ali said that the ECC met on Monday after the cabinet meeting and approved the revised rates for processing units of non-export and export industries, captive power plants of export and non-export industry and the CNG stations.
Interim Finance Minister Dr Shamshad Akhtar chaired the ECC meeting.
The energy minister said that the new rates have been approved with effect from November 1 and the changes made for certain categories would not have any adverse impact on the revenue requirements.
The gas rates for captive power plants and processing units of exporters have been further increased and for the non-export categories have been reduced to minimise the gap.
The gas prices for 57% of the domestic consumers have not been increased, according to a statement issued by the Ministry of Energy. It added that the fixed bill of Rs.400 per month is being introduced which is a negligible amount.
The ministry said that the new gas prices were necessary to ensure the sustainability of the gas supply chain and to meet the conditions of the IMF program.
The price revision for all categories of gas consumers is essential to prevent the two gas distribution companies – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) – from bankruptcy.
The energy ministry said that drastic devaluation of the rupee against the dollar has raised the cost of gas besides general inflation, which has increased the cost of gas exploration, production, distribution and transmission.
It added that the previous governments retained control of pricing a scarce commodity instead of strengthening the regulator and creating strong internal controls in the system for transparency and efficiency.
Inadequate gas pricing in the previous governments and no financing for the imported gas diversion over the years dented the national exchequer and created a circular debt stock of Rs2.1 trillion in the gas sector, according to the Ministry of Energy.
The government increased the prices of gas being consumed by exporters from Rs1,100 to Rs2,400 per mmbtu, an increase of Rs1,300 or 118%.
Earlier, the ECC had approved Rs2,050 per mmbtu rate, which was further increased by Rs350 per mmbtu.
There was a view that the difference between export and non-export industries should be minimal, Mohammad Ali said.
The rate of gas for processing units owned by the exporters has been revised upwards from Rs1,100 to Rs2,100 per mmbtu –an increase of Rs1,000 or 91%.
Due to shortage of local gas, Pakistan imports expensive LNG and supplies it to the domestic sector in winters and to the industry throughout the year.
The current cost of imported LNG is Rs3,650 or $12.5 per mmBtu.
For those industrialists who are not exporting goods but have captive plants, the ECC increased the prices from Rs1,200 to Rs2,500 per mmbtu, an increase of Rs1,300 or 108%. It was Rs100 per mmbtu less than approved by the ECC last week.
For the processing units of non-export industry, the ECC approved Rs2,200 per mmbtu rate ,which is Rs1,000 or 83% higher than the existing rates.
For the CNG consumer, the government on Monday approved Rs3,600 per mmbtu rate –up by Rs1,795 or 100% over the existing rates. But it was Rs800 per mmbtu less than the one approved by the ECC last week, according to the energy ministry’s statement.
The efficiency adjusted cost of CNG is almost half of that of petrol in equivalent terms, it added.
In the name of affordability, some of the most profitable businesses of the country are availing the cheapest natural gas, the energy ministry said. This has unduly enriched certain sectors while depriving the lowest income class, including poor farmers and small-scale industries, it added.
In case the caretaker government does not proceed to increase prices as per Ogra's advice and fund the RLNG diversion to domestic segment in absence of subsidies, there shall be a further addition in circular debt of around Rs400 billion, according to the ministry.
The energy ministry said that the government has completely kept the prices unchanged for gas supply to tandoors because "Roti" is the prime and foremost necessity.
The fertiliser prices are kept in line with Mari gas field's cost of gas which is Rs580 per mmbtu, only a Rs70 increase over the previous price just not to affect the farmers getting urea and ensure food security, it added.
