ISLAMABAD: Pakistan’s Oil and Gas Regulatory Authority (OGRA) has okayed up to 50 percent increase in gas prices as it calculated an estimated revenue requirement of Rs697.4 billion ($2.4 billion) to be collected from consumers this fiscal year, Pakistani media reported on Saturday, amid record inflation and economic meltdown in the South Asian country.
The South Asian nation has been witnessing an increase in the inflation rate since late last year when the government took prior actions to comply with the conditions set by the International Monetary Fund (IMF) to revive a stalled $7 billion bailout program, stalled since November.
Pakistan reported 38 percent inflation in May on the back of rising food and energy prices and a massive currency devaluation. The Pakistani rupee has devalued by around 30 percent since last June and played a major role in piling up the inflationary pressure.
Gas consumers in the country are likely to witness a potential 50 percent increase in prices starting from July as OGRA concluded its determinations for two struggling state-run gas distributors and submitted them to the government, The News English-language daily reported.
“The Sui Northern Gas Pipeline Limited (SNGPL), responsible for gas supply to consumers in Punjab and Khyber-Pakhtunkhwa (KP), will collect Rs358.4 billion,” the report read.
“The Sui Southern Gas Company (SSGC), which supplies gas to consumers in Sindh and Balochistan, will collect Rs339 billion.”
OGRA determined Rs1,238.68 per 1 million British Thermal Unit (mmBtu) to be the average prescribed price for SNGPL, reflecting a 50 percent increase or Rs415.11 as compared to the existing price, according to the report.
Similarly, the average prescribed price for SSGC was set at Rs1,350.68/mmBtu, representing a 45 percent increase of Rs417.23.
The regulator has proposed eliminating the distinction between protected and unprotected slabs for gas consumers and setting the price at 1238.68/mmBtu.
“This change will result in a significant increase in gas prices for protected low-slab consumers,” the report read further.
“However, two highly gas-consuming slabs will benefit from the new pricing as they were previously paying up to Rs3,100/mmBtu.”
Interestingly, while gas will become more expensive for zero-rated consumers, gas-filling stations, cement and fertilizer plants, power stations, and independent power producers (IPPs) will experience a reduction in gas prices, according to the report. However, the feedstock gas prices for the fertilizer sector will more than double.
The regulator has now suggested a uniform prescribed price of Rs1,238.68/mmBtu for all these categories.
The increase in gas prices is expected to further burden the masses reeling from record inflation in the country, with many saying they have been forced to cut their kitchen spending and focus only on most essential items.
As Pakistan’s Finance Minister Ishaq Dar prepares to present budget for the next fiscal year, financial experts have urged the government to take steps to mitigate the suffering of low-income groups.
