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ECC okays up to 124% gas tariff hike to unlock IMF loan

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet Monday approved up to 124% hike in the tariff of gas across the board for six months to implement a major prior condition set by the International Monetary Fund (IMF) for striking a staff-level agreement with Pakistan.

— Photo by author
— Photo by author

Review of Estimated Revenue Requirement

The finance ministry, in a statement, said the Ministry of Energy (Petroleum Division) tabled a summary on natural gas tariff sale pricing for FY2023 and presented tariff proposals for all consumer categories in accordance with the Review of Estimated Revenue Requirement (RERR) for the fiscal year 2022-23.

“The ECC after detailed discussion approved gas price revision proposal for domestic, commercial and power sectors for six months [January to June, 2023],” the statement mentioned.

Parley with IMF

While reforms in the energy sector and controlling the circular debt remained on top of the agenda during the talks held with the IMF mission. The 10-day parleys concluded in Islamabad last Thursday.

The IMF team left Islamabad without signing an agreement and asked Pakistan to take corrective measures. 

The New Tariffs

For households consuming up to 100 cubic meters of gas, the rate has been hiked by 16.6% to Rs350 per MMBTU, an increase of Rs50 per MMBTU. For domestic consumers who utilize 200 cubic meters, the rate has been increased by 32% to Rs730 per MMBTU.

A 69pc hike in gas tariff has been given go-ahead for consumers of up to 300 cubic meters of gas. It will now cost them Rs1,250 per MMBTU. For domestic consumers utilizing gas up to 400 cubic meters, the rate has been hiked by 99% to Rs2,200 per MMBTU.

For households using more than 400cubicmeters of gas, the rate is hiked by 124% to Rs3,277 per MMBTU.

Commercial Tariff

After a 28.6% hike, the gas price for commercial consumers has been increased from Rs1,283 per MMBTU to Rs1,650 per MMBTU.

The price of gas for the power sector has been increased from Rs857 per MMBTU to Rs1,050 per MMBTU. This resulted following an increase of 22.8%. For the export industry, after a 34% hike, the rate has been hiked up to Rs1,100 per MMBTU.

The CNG sector will have to pay Rs1,800 per MMBTU by a hike of 31%. After an increase of 46%, the fertilizer sector will be provided gas at Rs1,500 per MMBTU. The cement sector will pay Rs1,500 per MMBTU with an increase of 17.46% in the gas price.

Debt rescheduling

The cabinet committee also allowed the Ministry of Economic Affairs for signing of debt rescheduling agreement with Russia for debt suspension of the COVID-related amount of $14.53 million.

The approval was given after the ministry presented a summary of the G-20 Debt Service Suspension Initiative (DSSI). This debt relief was announced in April 2020 for IDA-eligible countries to mitigate the socioeconomic impact of COVID-19.

Under this initiative, debt relief was extended through the suspension of principal and interest payments. So far, 37 debt rescheduling agreements with 15 creditor countries have been signed.

The ECC granted Rs40 billion as Technical Supplementary Grant to Benazir Income Support Program (BISP). It is to meet its budgetary requirements for an increase in unconditional and conditional grants.

Social Safety Nets

The Ministry of Poverty Alleviation and Social Safety presented a summary of enhancing the BSIP budget. It briefed the committee on the ongoing BISP programs. The Unconditional Cash Transfer (UCT) Program “Benazir Kafaalat” covers around nine million families. Two Conditional Cash Transfer (CCT) programs namely Benazir Taleemi Wazaif and Benazir Nashonuma.

Disbursement of cash assistance to affectees of floods as emergency relief of Rs25,000 was provided per affected family to around 2.7 million families.

In the CCT Program, there have been accelerated enrolments in Benazir Taleemi Wazaif. It is anticipated that additional one million children will be enrolled by the end of June 2023.

BISP has extended CCT Benazir Nashonuma to all the districts of the country.

Also Read This new Updated Article Dar Shocks Gas Consumers With Big Hikes

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