ISLAMABAD: In a significant development on Monday, the Economic Coordination Committee of the Cabinet greenlighted a substantial hike in natural gas prices, escalating by up to 194 per cent which will be implemented from Nov 1.

In addition to this, consumers will also witness an unprecedented surge in fixed monthly charges, up to 3,900pc for protected and non-protected consumers. Caretaker Finance Minister Shamshad Akhtar convened the ECC meeting where the Petroleum Division’s proposal for a substantial, across-the-board gas price hike for all sectors was approved.

According to the summary, the revision of gas prices was due on July 1, 2022. However, the PMLN-led coalition government deferred this decision, leaving the politically sensitive task to the interim government. The two companies in question, SSGC and SNGPL, have already reported a deficit of Rs46 billion for the period from July to September.

The fixed monthly charges for domestic protected consumers have seen a substantial rise from Rs10 to Rs400. For non-protected consumers, the charges have been divided into two slabs. The first category, up to 1.5 hm3, has seen an increase from Rs460 to Rs1,000. For the second category, above 1.5 hm3, the charges have been raised from Rs460 to Rs2,000.

Allows wheat, urea imports to meet domestic shortages

It is pertinent to mention that natural gas reserves of the country are depleting at a compound annual growth rate of 5-7pc, as per the Petroleum Division estimates.

While the tariff for the protected consumers, who constitute 57pc of the domestic users, remains unchanged, there has been a significant adjustment in the fixed monthly charges for this category. These charges have been escalated from the existing Rs10 to Rs400 per month. This will jump the annual bill of this category up to 150pc.

For residential consumers who are not protected, a significant increase was approved in gas rates. The rates will rise by 50pc to Rs300 per mmBtu for consumption of up to 0.25 hcm, double to Rs600 per mmBtu for 0.6 hcm, and surge by 150pc to Rs1,000 for up to 1 hcm.

The most substantial increase of 173pc was made in the slab up to 3 hcm, where the prices will skyrocket to Rs3,000 per mmBtu from the current Rs1,100.

The tariff for bulk consumption was increased by a quarter from Rs1,600 per mmBtu to Rs2,000. However, the special commercial category (tandoor roti) will remain unchanged at Rs697 per mmBtu.

For commercial consumers, a significant tariff hike of over 136pc was approved, raising the rate to Rs3,900 per mmBtu. Cement factories and CNG stations are expec­ted to see an increase of more than 193pc and 144pc, resp­e­ctively, bringing the tariff to Rs4,400. Export industries tariff was increased 86pc to Rs2,050 per mmBtu, while non-export industries tariff increased by 117pc to Rs2,600.

Wheat imports

The ECC also allowed the cost-effective import of one million tonnes of milling wheat, via the Trading Corporation of Pakistan (TCP), during the current fiscal year using an open tendering process. This measure is aimed at maintaining strategic reserves.

Furthermore, the ECC has endorsed a proposal that encourages the private sector to import specific milling wheat, provided it aligns with the criteria set out in the Import Policy Order 2022. The ECC has also instructed the Ministry of National Food Security and Research to arrange for a third-party verification of the country’s wheat stock.

Urea requirement

The Ministry of Industries and Production presented a summary outlining strategies to fulfil the urea requirements for the rabi season of 2023-24. The ECC sanctioned the immediate import of 200,000 tonnes of urea fertilisers. The committee also mandated a continuous gas supply for the fertiliser industry. Additionally, it was resolved that provinces should take a more active role in shouldering the cost of importation.

Also, the ECC approved a technical supplementary grant of Rs484 million for the Earthquake Recons­truction and Rehabilitation Authority.

The meeting also approved the establishment of the National Credit Guarantee Company Ltd, an initiative aimed at bolstering the credit enhancement of small and medium enterprises.

Published in Dawn, October 24th, 2023