Pakistan’s gas and power regulators raised the rates of the two essential commodities on Wednesday, making life even more difficult for the country’s inflation-stricken citizens.
The Oil and Gas Regulatory Authority (OGRA) has announced a significant hike in natural gas prices beginning November 1 of this year.
Increase in Gas Prices to Meet Another Condition of IMF
“In accordance with federal government policy guidelines,” meeting yet another condition imposed by the International Monetary Fund (IMF) for the delivery of its $710 million second tranche.
While the pricing for protected consumers, who account for 57% of domestic users, remains unaltered, the fixed monthly charges for this category have been increased from Rs. 10 to Rs. 400 per month.
However, this might increase the annual bill for this group by up to 150%.
The charges for non-protected consumers have been separated into two categories.
The first category, which uses up to 1.5 cubic hectometers (hm3), has gone up from Rs. 460 to Rs. 1,000.
The fee for the second category, using more than 1.5 hm3, has been hiked from Rs. 460 to Rs. 2,000.
Furthermore, gas rates have been increased significantly for residential customers who are not protected.
Increase in Slabs
Moreover, rates would increase by 50% to Rs. 300 per metric million British thermal unit (mmbtu) for consumption of up to 0.25 hm3, double to Rs. 600 per mmbtu for consumption of up to 0.6 hm3, and triple to Rs. 1,000 for consumption of up to 1 hm3.
The slab of those consuming up to 3 hm3 saw a 173% increase, with prices skyrocketing to Rs. 3,000 per mmbtu from the existing Rs. 1,100.
The bulk consumption tariff has been raised by a quarter, from Rs. 1,600 to Rs. 2,000 per mmbtu.
However, the special commercial category (tandoors), on the other hand, will stay constant at Rs. 697 per mmbtu.
Increase For Commercial Customers
A huge tariff increase of more than 136% was announced for commercial customers, boosting the rate to Rs. 3,900 per mmbtu.
Furthermore, the tariff for cement plants and CNG stations has increased by more than 193% and 144%, respectively, bringing the total to Rs. 4,400.
The export tax has been hiked by 86% to Rs. 2,050 per mmbtu. The tariff for non-export sectors has been increased by 117% to Rs. 2,600.
However, the interim federal government directed the authority to notify the revised category-wise natural gas selling pricing under sections 7(1), 8(3), and 21(2)(h) of the Ogra Ordinance, 2002.
According to the statement, the federal government has sole authority to set rates for various categories of natural gas users while taking into account the socioeconomic agenda and sector-specific policies and making adjustments in cross subsidy and development surcharge.
Furthermore, the interim government approved a significant increase in natural gas prices of up to 194% on October 23, which went into effect on November 1.
Gas Reserves Are Decreasing at a Rate of 5% to 7% Annually
According to Ogra, the country’s gas reserves are decreasing at a rapid rate of 5% to 7% each year.
Every year, more expensive imported fuel dominates the gas basket.
The sharp depreciation of the rupee against the dollar has raised the price of gas.
The cost of gas exploration, production, distribution, and transportation has risen due to general inflation.
According to the statement, previous governments held authority over pricing a scarce resource rather than strengthening the regulator and establishing strong internal controls in the system for transparency and efficiency.
To read our blog on “IMF dissatisfied on not reviving gas prices twice a year,” click here.