In a momentous event on Monday, the Cabinet’s Economic Coordination Committee approved a huge increase in natural gas prices, increasing by up to 194%, to take effect on November 1.
Increase in Gas Tariffs
In addition, consumers would face an unprecedented increase in fixed monthly rates of up to 3,900pc for both covered and non-protected users.
Caretaker Finance Minister Shamshad Akhtar held the ECC meeting, which accepted the Petroleum Division’s proposal for a significant, across-the-board increase in gas prices for all industries.
According to the summary, the gas price increase was scheduled for July 1, 2022. However, the coalition government led by the PMLN postponed this decision, leaving the politically difficult responsibility to the interim government.
Shortfall at SSGC and SNGPL
SSGC and SNGPL, the two corporations in question, have already disclosed a Rs. 46 billion shortfall from July to September.
Fixed monthly prices for domestic protected users have increased significantly, from Rs. 10 to Rs. 400.
The charges for non-protected consumers have been separated into two categories.
The price for the first category, up to 1.5 hm3, has risen from Rs. 460 to Rs. 1,000. The rates for the second category, exceeding 1.5 hm3, have been raised from Rs. 460 to Rs. 2,000.
Country’s Natural Gas Reserves Are Depleting
According to the Petroleum Division, the country’s natural gas reserves are depleting at a compound annual growth rate of 5-7 percent.
While the tariff for protected consumers, who account for 57% of domestic users, remains unchanged, the fixed monthly charges for this group have been significantly reduced.
These charges have been increased from Rs. 10 to Rs. 400 per month. This will increase the annual bill for this category by 150 percent.
A significant increase in gas rates was approved for residential consumers who are not protected.
Percentage Increase in Prices
Rates will rise by 50% to Rs. 300 per mmBtu for consumption of up to 0.25 hcm, double to Rs. 600 per mmBtu for consumption of 0.6 hcm, and triple to Rs. 1,000 for consumption of up to 1 hcm.
The most significant increase of 173 percent was made in the slab up to 3 hcm, where prices will skyrocket to Rs. 3,000 per mmBtu from Rs. 1,100 currently.
The bulk consumption tariff was raised by a quarter, from Rs. 1,600 to Rs. 2,000 per mmBtu.
The special commercial category (tandoor roti, for example) will remain unchanged at Rs. 697 per mmBtu.
A significant tariff increase of more than 136 percent was approved for commercial consumers, raising the rate to Rs. 3,900 per mmBtu.
Tariff Increase For Cement Factories and CNG Stations
The tariff for cement factories and CNG stations is expected to rise by more than 193 percent and 144 percent, respectively, bringing the total to Rs. 4,400.
The tariff for export industries was raised by 86 percent to Rs. 2,050 per mmBtu, while the tariff for non-export industries was raised by 117 percent to Rs. 2,600.
To read our blog on “Gas crisis getting worse in Khyber Pakhtunkhwa (KP),” click here.
