ISLAMABAD, Oct 10: The government has put off an average 10 per cent increase in gas tariff after donors agreed not to press for half-yearly price revision for the time being.

A senior government official told Dawn that a formal proposal for gas tariff increase was finalized by the ministries of petroleum and finance for submission but could not be taken up at the federal cabinet level due to situation arising out of Sept 11 events in the United States.

The official said that donors later agreed that domestic situation was not conducive to go for gas tariff increase because of two factors. Firstly, the economy had already been hit due to prevailing situation and tariff increase could aggravate it further. Secondly, the anti-US elements could take advantage of this decision and bring people on streets for rallies and pretest demonstrations.

The official said that practically the gas tariff increase did not require approval from the federal cabinet because it had already authorized the petroleum ministry in March this year to revise gas prices on six-monthly basis in accordance with international oil prices.

The donors have, however, now demanded that interval of tariff revision should be reduced from six months to three months to adequately represent fluctuations in international oil prices. They have, however, not pressed for immediate tariff revision.

The government has not given any commitment on the question of quarterly tariff revision but it would be more suitable to review gas prices in January and July every year instead of March and September.

Under the commitments with the International Monetary Fund for fiscal 2001-2, the government was scheduled to revise gas price by the end of September.

From now onward, gas prices would be reviewed on Ist of January and Ist of July every year to pass on the impact of producer price already linked with international fuel oil price to the consumers. Roughly 18 per cent average increase in gas price will take place every six months for at least next three years.

Last time, the gas tariff was increased by 14.4 to 39.4 per cent for industrial, commercial and domestic consumers on March 17, 2001.

Pakistan’s power sector is the largest gas consumer with 31 per cent share, followed by fertilizer with 25 per cent, household with 21 per cent, industry with 20 per cent and commercial with around 4 per cent.