ISLAMABAD: Caretaker Energy Minister Muhammad Ali defended the government’s decision to hike gas tariffs in the country on Tuesday, saying it would save Pakistan Rs400 billion ($1.45 billion) and alleviate its circular debt.

Last week, the Economic Coordination Committee (ECC) of the federal cabinet approved the increase in gas prices at a meeting chaired by Finance Minister Dr. Shamshad Akhtar.

It was widely reported that the decision would impact the lives of millions across the country, though the energy minister said the government had taken the decision in a way that it would not burden the financially vulnerable segments of society.

“If we had not increased the gas prices, the country would have continued to incur a loss of Rs400 billion,” he said.

“If the country had progressively increased these prices in the past, we would not have raised these rates so much,” he continued.

The minister said the new tariffs would not affect the protected 57 percent category of domestic consumers since the government had only increased their fixed monthly charges from Rs10 to Rs400.

He noted that Pakistan had witnessed a depletion in its gas reserves in the last decade, adding the country had also failed to discover new reserves during this period since it was spending a huge amount on energy imports and dealing with the circular debt.

Ali maintained the recent price increase would allow the government to invest in gas exploration and improve the overall economic situation of the country.

The hike in gas tariffs come at a time when Pakistan is bracing for the first review of a $3 billion short-term financing facility it availed from the International Monetary Fund (IMF) to stave off a looming default in July this year.

The Fund’s team is expected to visit the country to carry out the review during the course of this week.