Gas Bomb
ISLAMABAD: The interim federal cabinet exploded a gas bomb by approving a substantial increase in natural gas tariffs for various consumer categories.
The Power Division notified up to 172 percent hike in gas cost for domestic users, tandoors (traditional ovens), general industries, export-oriented sectors, captive power plants, compressed natural gas (CNG) operations, and independent power producers (IPPs), as well as commercial sectors.
The cabinet meeting, chaired by the Caretaker Prime Minister, announced that the new tariffs would come into effect on November 1.
This significant tariff adjustment was undertaken in response to a demand from the International Monetary Fund (IMF), which called on the government to raise gas tariffs in an effort to address the circular debt in the gas sector, which stands at Rs2.1 trillion.
Govt throws gas bomb on consumers to meet IMF’s condition.
This marks the second gas tariff increase in 2023. In January this year, gas tariffs were raised by up to 112 percent. Petroleum Minister Muhammad Ali also asserted that the growth of the circular debt had ceased following this most recent tariff hike.
The Ministry of Energy (Power Division) issued a notification following the cabinet meeting, claiming that “The government has completely maintained the sale price for gas supplies to Roti tandoors (bread ovens) because ‘Roti’ is a fundamental necessity.” However, the notification revealed otherwise.
The tariff for tandoors was set at Rs697/million British thermal units (mmBtu), indicating a 543 percent increase for consumers using up to 1 hm3 (hecto cubic meters) per month, where the tariff was previously Rs110/mmbtu. For consumers in the 2 to 3 hm3 per month category, the tariff increased by 262 percent to Rs220/mmbtu. For consumers using over 3 hm3 per month, the tariff was set at Rs700.
For the protected category, the tariff remained unchanged, but fixed charges, whether gas was consumed or not, were increased to Rs400/month from the previous Rs10. The protected category encompasses consumers whose average consumption in the last four winter months (November to February) is less than or equal to 0.9 hm3 per month.
For unprotected categories, the tariff for consumers using up to 0.25 hm3 per month increased by 50 percent to Rs300/mmbtu. For those in the 0.6 hm3 per month category, the consumption tariff increased by 100 percent to Rs600/mmbtu, and for the 1 hm3 per month category, it increased by 150 percent to Rs1,000/mmbtu. For consumers with a consumption level of up to 1.5 hm3 per month, there was a 100 percent increase, with the price set at Rs1,200/mmbtu. The fixed charges for this category (0.25 to 1.5 hm3) increased to Rs1,000/month, up from Rs460.
Similarly, the tariff for consumers in the up to 2 hm3 category saw a 100 percent increase to Rs1,600 from the previous Rs800/mmbtu. Among domestic sector categories, the highest increase of 172 percent was applied to consumers using up to 3 hm3 per month, resulting in a tariff of Rs3,000/mmbtu, previously Rs1,100/mmbtu. For consumers in the 4 hm3 per month category, the tariff increased by 75 percent to Rs3,500/mmbtu, and for those consuming more than 4 hm3 per month, the tariff increased by 29 percent to Rs4,000/mmbtu. For the consumption slabs between 2 hm3 and above, the fixed charge was set at Rs2,000/month.
The CNG sector’s offtake rate increased from Rs1,805/mmbtu to Rs3,600/mmbtu, a 99.4 percent increase. The tariff for captive gas users in export-oriented industries increased to Rs2,400/mmbtu from Rs1,100/mmbtu. For captive plants in the general industry, the gas tariff increased to Rs2,500/mmbtu from Rs1,100/mmbtu. General industry tariffs also increased from Rs1,200 to Rs2,100/mmbtu. Similarly, export-oriented industries saw their tariff increase to Rs2,200/mmbtu from the previous Rs1,100/mmbtu.
For the power sector, including K-Electric’s power stations, the bulk tariff remained unchanged at Rs1,050/mmbtu. This rate had previously been increased from Rs857 to Rs1,050 in January 2023. However, for Liberty Power, the gas tariff increased to Rs3,890/mmbtu, up from Rs1,500.
For all established commercial units, the tariff increased by over 136 percent to Rs3,900/mmbtu from the previous Rs1,650/mmbtu. Commercial units include those under local authorities, as well as businesses engaged in the direct commercial sale of consumer items such as cafes, bakeries, milk shops, tea stalls, canteens, barber shops, laundries, hotels, malls, and entertainment venues such as cinemas, clubs, theaters, private offices, corporate firms, and ice factories.
