Over 61% increase in gas tariff likely

Ministry suggests uniform tariff for all consumers to end cross-subsidy.

ISLAMABAD: The government is likely to increase gas tariffs by over 61% to implement the decision of the Oil and Gas Regulatory Authority (Ogra), which will generate funds for the gas utilities that are on the verge of financial collapse due to delay in price hike.

For the first time, the Ministry of Petroleum has advised the prime minister to introduce a uniform gas tariff for all consumers in an effort to end cross-subsidy for the consumers.

Officials familiar with the development said that the ministry had sent a summary to the prime minister, seeking an increase in gas prices from the start of April.



According to proposals, the ministry has suggested exemption for the domestic gas users falling in the first two consumer categories. However, the tariff for all other domestic consumers would be increased.

The current gas price for domestic consumers using 100 cubic metres per month stands at Rs106.14 per million British thermal units (mmbtu), Rs212.28 per unit for up to 300 cubic metres and Rs530.69 per unit for more than 300 cubic meters.

It has been recommended to increase the gas price to Rs750 per mmbtu, except for the first two slabs.

The tariff for all commercial consumers is Rs636.83 per mmbtu and Rs636.83 per unit for ice factories.

The tariff for industrial consumers and power stations of the Water and Power Development Authority, K-Electric, independent power producers and captive power plants stand at Rs488.23 per unit.

Feedstock gas price for fertiliser units on the Sui Northern Gas Pipelines Limited (SNGPL) network is Rs123.41 per mmbtu while the tariff for gas used as fuel is Rs488.23 per unit.

The petroleum ministry has recommended increasing the gas price to Rs750 per mmbtu for all commercial, industrial and power sector consumers.

The government is making efforts to introduce a uniform tariff for all consumers in a bid to end cross-subsidy in line with the suggestion of multilateral donors.

In January, the petroleum ministry had planned to increase gas prices, but the government faced a strong resistance in the Senate from opposition senators, who warned of staging a sit-in if the plan was pushed ahead.

Earlier, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi informed the Cabinet Committee on Energy (CCE) on February 12 that SNGPL and Sui Southern Gas Company (SSGC) could not sustain losses of billions of rupees due to low tariffs and may collapse financially any time.

He urged the prime minister to raise the gas tariff but the premier put on hold the proposed increase until April and directed the minister to bring a fresh proposal.

The minister also proposed a small tariff increase for the first two slabs of domestic consumers consisting of the low-income group, and suggested a higher price increase for the rest of the categories.

The prime minister said it would be more appropriate that the increase in tariff was deferred until the time of low utilisation by the domestic consumers.

Published in The Express Tribune, March 12^th, 2015.

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