Home South Asia Pakistan Government on mission to recover Rs334b from gas, electricity consumers

Government on mission to recover Rs334b from gas, electricity consumers

ECC of the cabinet approved to increase gas and power tariffs that will be enforced from July 1. The hike in gas and power tariffs were two major conditions of the IMF loan. Importantly, the IMF Executive Board has called a meeting on July 3 to approve Pakistan’s request for $6 billion bailout package.

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News Desk |

If the media reports are to be believed then the federal government is set to increase gas prices by up to 190 percent and electricity prices by Rs1.5 per unit to recover an additional Rs334 billion from consumers.

The Express Tribune has reported that the government has approved the hike in gas and power tariffs as these were two major conditions of the International Monetary Fund (IMF) loan. The paper said that the Economic Coordination Committee (ECC) of the cabinet took these decisions that will be enforced from July 1, as has been agreed with the IMF.

Pakistan Tehreek-e-Insaf (PTI) government had approved up to 143 percent increase in natural gas tariff during the ongoing fiscal year having a cumulative financial impact of about Rs116 billion.

Importantly, the IMF Executive Board has called a meeting on July 3 (next Wednesday) to approve Pakistan’s request for $6 billion bailout package. The paper noted that “the maximum burden has been put on the middle and upper-middle-income groups whose disposable incomes have already shrunk due to increase in taxes and stagflation.”

PTI Increases Electricity, Gas Prices for the Second Time

It is the second time in the current fiscal year that Pakistan Tehreek-e-Insaf (PTI) government has jacked up prices of electricity and gas for domestic consumers to keep the gas companies afloat.

Earlier, it was reported, the Oil and Gas Regulatory Authority (OGRA) had requested the government to increase the prices of gas by 47 percent for the fiscal year 2019-2020. Due to the depreciation of the rupee against the dollar, it was indicated, the gas prices in Punjab and Khyber-Pakhtunkhwa may further increase by 47 percent while in Sindh and Balochistan by 28 percent from July 1, 2019.

Read more: IMF wanted 94pc hike in gas prices, 50pc in power tariffs:…

In two separate determinations forwarded to the government, Dawn had reported, Ogra had allowed about 47 percent or Rs237 per unit (million British thermal unit) increase in the prescribed price of Sui Northern Gas Pipelines Limited (SNGPL) to Rs738 from Rs501. It had said the company’s unaccounted for gas (UFG) losses stood at about 11 percent.

Likewise, it had added, the regulator had allowed 28 percent or Rs160 per unit increase in the prescribed price of Sui Southern Gas Company Limited (SSGCL) to Rs738 from Rs578. SSGCL’s UFG losses stood at a whopping 16 percent.

PTI Blamed PML-N for 143 Percent Increase in Gas Tariff in Sept 2018

In September 2018, it was reported, Pakistan Tehreek-e-Insaf (PTI) government had approved up to 143 percent increase in natural gas tariff during the ongoing fiscal year having a cumulative financial impact of about Rs116 billion.

Read more: Ogra recommends 47% rise in gas prices – fulfilling an IMF…

The previous increase in the gas rates had partly shifted the burden from residential consumers to commercial, industrial, power, fertilizer, cement and CNG sectors. The then finance minister Asad Umar had presided over the meeting of the Economic Coordination Committee (ECC) of the cabinet which had approved the new rates.

The then minister for petroleum Ghulam Sarwar Khan had blamed the Pakistan Muslim League Nawaz (PML-N) government saying the two gas companies — SSGC and SNGPL — were operating in profit when PML-N assumed power in 2013, but it left behind a deficit of Rs152bn after five years.

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