ECC defers decision to hike gas tariff
ECC also approves establishing Digital Media Wing in the Ministry of Information and Broadcasting
A gas cooker. PHOTO: REUTERS
ISLAMABAD:
The federal government has deferred for the third time decision to increase gas prices after Minister for Railways Sheikh Rashid warned of grave political consequences amid reeling double-digit inflation.
The Economic Coordination Committee (ECC) of the Cabinet on Tuesday constituted an inter-ministerial committee to work out a ‘reformed proposal’ for increasing gas tariffs. Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh chaired the meeting.
Technocrats at the Petroleum Division had this time tried to pass on increase in prices for domestic consumers by increasing gas prices for power generation plants rather than directly increasing gas prices for domestic consumers.
The Petroleum Division had also proposed to increase minimum monthly gas charges and meter rent.
Special Assistant to the Prime Minister on Petroleum Nadeem Baber had earlier said there would not be any increase in gas prices for the domestic consumers.
In the last ECC meeting, as well as in the second revised summary it is stated that there will be no change in tariff for domestic sector and special commercial – roti tandoors.
But a comparison between the original and revised ECC summary showed that in the original summary the Petroleum Division proposed 12% increase in gas for power sector while in the revised summary the proposed increase was 15% – a further jump of one-fourth in prices that the domestic consumers will have to bear through their monthly electricity bills.
Similarly, the minimum billing volume for domestic sector has been proposed to be increased from 40 cm per month to 50 cm per month, for which the monthly minimum bill will be Rs220, exclusive of taxes. The current minimum bill is Rs121, exclusive of taxes.
Further, the benefit of fixed gas charges of Rs220 per month also proposed to be restricted for consumers having consumption of up to 100 cm per month. One preceding slab benefit was proposed to be available for only domestic consumers, using for residential purposes.
The monthly meter rent was also proposed to increase from Rs20 to Rs80 – a fourfold increase.
It was for the third time since January 21 that the issue of increase in gas tariffs came under discussion in the ECC meeting but it remained inconclusive.
A delay in increase in gas prices may give a negative signal to the International Monetary Fund (IMF) visiting team about Prime Minister Imran Khan’s government’s commitment to the IMF programme.
The new proposed increase was aimed at collecting additional Rs28 billion from the gas consumers, Rs6 billion less than original proposal. The summary was silent on the source of financing the Rs6 billion gap, as the Ministry of Finance is not giving supplementary budget.
The sources said Minister for Railways Sheikh Rashid was the first one to oppose the summary. He stated in the meeting that any decision to increase the gas prices may create serious political problems for the government at a time when people are witnessing highest inflation in a decade.
Sheikh Rashid is said to have warned that if anti people measures are not stopped, a time may come when people may start misbehaving with the ministers on public places.
He was supported by some members from the bureaucracy, which led to postponement of the decision.
The Pakistan Bureau of Statistics (PBS) on Saturday reported that headline inflation in January jumped to over nine years highest level of 14.6%.
However, the authorities still believe that the underline inflationary pressure have started receding and the current wave of inflation due to food supply shocks may end very soon.
The Petroleum Division had also proposed to the ECC to increase the gas prices for commercial, cement and general industry by 5% and for power sector by 15%.
The tariff for zero rated industries and their captive power plants were proposed to be increased to $6.5 per mmbtu (Rs1,000 per mmbtu), regardless of location.
For captive power plants, other than zero rated, and the CNG sector 15% increase was proposed. For fertilizer fuel, the Petroleum Division recommended 32% increase in tariffs.
The Petroleum Division also proposed that the weighted average cost of gas equalization arrangements between the Sui Northern Gas Pipelines Limited (SNGPL) and the Sui Sothern Gas Company (SSGC) may be changed to bring uniformity in gas purchase prices of both the utility companies.
It was proposed that the gas equalization agreement may be amended to allow intra-company adjustment in such a manner that the revenue surplus of one company may be transferred to other company to the extent the revenue deficit of the latter is entirely eliminated. There was disagreement in the ECC on this issue due it its impact on the dividend and share prices of both the companies.
The ECC also approved the grant of amount Rs153.3 million from the budget of the Ministry of Finance, as technical supplementary grant for the Ministry of Interior, for compensation to the victims of suicide attack at Islamabad district courts on March 3, 2014.
In order to register the Postal Life Insurance as the Public Limited Company, the ECC approved an amount of Rs700 million as initial paid-up capital. The amount shall be allocated by the Finance Division and transferred to the proposed Postal Life Insurance Company.
The ECC also approved establishing Digital Media Wing in the Ministry of Information and Broadcasting.
“The purpose of the wing shall be to effectively counter the fake/libelous news and highlight the development agenda of the government,” said the Finance Ministry.
The federal government has deferred for the third time decision to increase gas prices after Minister for Railways Sheikh Rashid warned of grave political consequences amid reeling double-digit inflation.
The Economic Coordination Committee (ECC) of the Cabinet on Tuesday constituted an inter-ministerial committee to work out a ‘reformed proposal’ for increasing gas tariffs. Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh chaired the meeting.
Technocrats at the Petroleum Division had this time tried to pass on increase in prices for domestic consumers by increasing gas prices for power generation plants rather than directly increasing gas prices for domestic consumers.
The Petroleum Division had also proposed to increase minimum monthly gas charges and meter rent.
Special Assistant to the Prime Minister on Petroleum Nadeem Baber had earlier said there would not be any increase in gas prices for the domestic consumers.
In the last ECC meeting, as well as in the second revised summary it is stated that there will be no change in tariff for domestic sector and special commercial – roti tandoors.
But a comparison between the original and revised ECC summary showed that in the original summary the Petroleum Division proposed 12% increase in gas for power sector while in the revised summary the proposed increase was 15% – a further jump of one-fourth in prices that the domestic consumers will have to bear through their monthly electricity bills.
Similarly, the minimum billing volume for domestic sector has been proposed to be increased from 40 cm per month to 50 cm per month, for which the monthly minimum bill will be Rs220, exclusive of taxes. The current minimum bill is Rs121, exclusive of taxes.
Further, the benefit of fixed gas charges of Rs220 per month also proposed to be restricted for consumers having consumption of up to 100 cm per month. One preceding slab benefit was proposed to be available for only domestic consumers, using for residential purposes.
The monthly meter rent was also proposed to increase from Rs20 to Rs80 – a fourfold increase.
It was for the third time since January 21 that the issue of increase in gas tariffs came under discussion in the ECC meeting but it remained inconclusive.
A delay in increase in gas prices may give a negative signal to the International Monetary Fund (IMF) visiting team about Prime Minister Imran Khan’s government’s commitment to the IMF programme.
The new proposed increase was aimed at collecting additional Rs28 billion from the gas consumers, Rs6 billion less than original proposal. The summary was silent on the source of financing the Rs6 billion gap, as the Ministry of Finance is not giving supplementary budget.
The sources said Minister for Railways Sheikh Rashid was the first one to oppose the summary. He stated in the meeting that any decision to increase the gas prices may create serious political problems for the government at a time when people are witnessing highest inflation in a decade.
Sheikh Rashid is said to have warned that if anti people measures are not stopped, a time may come when people may start misbehaving with the ministers on public places.
He was supported by some members from the bureaucracy, which led to postponement of the decision.
The Pakistan Bureau of Statistics (PBS) on Saturday reported that headline inflation in January jumped to over nine years highest level of 14.6%.
However, the authorities still believe that the underline inflationary pressure have started receding and the current wave of inflation due to food supply shocks may end very soon.
The Petroleum Division had also proposed to the ECC to increase the gas prices for commercial, cement and general industry by 5% and for power sector by 15%.
The tariff for zero rated industries and their captive power plants were proposed to be increased to $6.5 per mmbtu (Rs1,000 per mmbtu), regardless of location.
For captive power plants, other than zero rated, and the CNG sector 15% increase was proposed. For fertilizer fuel, the Petroleum Division recommended 32% increase in tariffs.
The Petroleum Division also proposed that the weighted average cost of gas equalization arrangements between the Sui Northern Gas Pipelines Limited (SNGPL) and the Sui Sothern Gas Company (SSGC) may be changed to bring uniformity in gas purchase prices of both the utility companies.
It was proposed that the gas equalization agreement may be amended to allow intra-company adjustment in such a manner that the revenue surplus of one company may be transferred to other company to the extent the revenue deficit of the latter is entirely eliminated. There was disagreement in the ECC on this issue due it its impact on the dividend and share prices of both the companies.
The ECC also approved the grant of amount Rs153.3 million from the budget of the Ministry of Finance, as technical supplementary grant for the Ministry of Interior, for compensation to the victims of suicide attack at Islamabad district courts on March 3, 2014.
In order to register the Postal Life Insurance as the Public Limited Company, the ECC approved an amount of Rs700 million as initial paid-up capital. The amount shall be allocated by the Finance Division and transferred to the proposed Postal Life Insurance Company.
The ECC also approved establishing Digital Media Wing in the Ministry of Information and Broadcasting.
“The purpose of the wing shall be to effectively counter the fake/libelous news and highlight the development agenda of the government,” said the Finance Ministry.