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Energy officials to seek PM nod on gas tariff hike

According to The News on Wednesday, the administration will attempt to persuade Prime Minister Shehbaz Sharif to approve a long-requested as well as significant pricing increase for both of the nation’s cash-strapped gas companies.

Former Prime Minister Shahid Khaqan Abbasi, Minister of State for Finance and Revenue Dr. Ayesha Ghous Pasha, Minister of State for Petroleum Musadik Masood Malik, Tariq Bajwa SAPM, Secretaries of Finance and Petroleum, and other senior officers all participated in the decision-making meeting, which was presided over by Finance Minister Ishaq Dar.

Due to the fact that gas prices have not increased over the past three to four years, Sui Northern and Sui Southern are currently facing a significant financial burden of Rs. 600–700 billion. According to sources, neither gas company can buy gas at Rs1,000 per unit and sell it for Rs589.52 per MMBTU.

One of the attendees of the meeting informed The News, “It was determined in the meeting that a special presentation would be made to Prime Minister Shehbaz Sharif seeking his agreement to increase gas pricing to provide financial relief to both the gas firms.

The official reported that after discussing a number of price-hike possibilities, the conference decided to exempt gas users who use less gas each month from the increase.

Additionally, only those who use the most gas should be subject to higher tariffs. To that end, a thorough presentation would be made based on the solutions determined in the meeting, for the PM’s approval.

The Petroleum Division would then take up the matter for ECC approval before sending a formal notification to the federal cabinet.

The IMF also favours raising gas prices in order to alleviate financial pressure on gas companies and strengthen the gas industry.

On June 3, 2022, the OGRA announced a tariff rise of 40–45% for the fiscal year 2022–2023 in order to satisfy the financial needs of both gas utilities.
In accordance with the modified OGRA ordinance, the gas utilities would be required to follow the prescribed pricing if the federal government fails to notify it of suggestions on category- and slab-wise gas prices within 40 days.

The regulator had increased the average prescribed for SNGPL by Rs265 per unit, or 45 percent, to Rs854.52 mmBtu. Instead of 40 days passing, 4 months have already gone with no increase in petrol prices. To make up the four-month backlog, the government will now have to raise the price to Rs. 1000. The average prescribed price for SSGCL, which showed a rise of 40% or Rs308 per unit, was assessed by OGRA to be Rs699.30 per mmBtu.

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