KARACHI: Pakistan's top economic body on Thursday approved an increase in natural gas tariff by up to 235 percent for commercial, residential and industrial consumers, a move that would allow the country's two gas supply companies to recover around Rs660 billion ($3.2 billion) during the current fiscal year. 

The Economic Coordination Committee (ECC) took the decision on a summary submitted by the Petroleum Division on the natural gas sale pricing for fiscal year 2022-23.

The decision would be implemented from July after approval from the federal cabinet and help both gas utilities generate around Rs120 billion ($579 million) additional revenue, according to the official documents. 

“It was submitted that since FY2015-16, gas prices were not revised in line with revenue requirements determined by OGRA (Oil and Gas Regulatory Authority). This resulted in accumulation of revenue shortfall/tariff differential amounting to Rs547 billion (2.6 billion) as of March 2022,” the finance ministry said in a statement. 

“Similarly, gas sector circular debt [that] remained at Rs299 billion ($1.4 billion) in June 2018 increased to Rs1,232 billion ($5.9 billion) on 31st March 2022.” 

The ministry said the Petroleum Division placed broad principles or parameters for the revision of category–wise consumer gas sale prices to overcome revenue losses, contain gas sector circular debt, sustain the supply chain, and to invest in exploration and production.

“The ECC approved the proposed revision in consumer gas sale prices with direction to further reduce the gas rates for export and non-export industry/captive power,” the statement said. “The ECC decreased the price per MMBTU for general industry by Rs100, from Rs1,450 to Rs1,350 per MMBTU, and for captive power, from Rs1,650 to Rs1,550 per MMBTU.” 

The government has decided to reduce pricing slabs from seven to five. Gas prices for domestic consumers have been increased by 43 percent from Rs121 per Metric Million British Thermal Unit (mmBtu) to Rs171 per mmBtu for the first slab, according to the documents available at OGRA website.

The rates would remain unchanged at Rs300 per mmBtu for the second slab with gas consumption of up to 100 cubic meters. The price for the consumption of gas up to 200 cubic meters, which falls under the third slab, would be increased by 26 percent to Rs696 per mmBtu, while the price for the fourth slab of up to 300 cubic meters has been increased by 151 percent to Rs1,856 per mmBtu.  

Consumers falling in the fifth slab and utilizing up to 400 cubic meters or more gas would now pay Rs3,712 per mmBtu as compared to Rs1,107, an increase of 235.3 percent.  

OGRA officials said the authority would notify the revised gas tariff after the federal cabinet endorses the ECC decision.

“OGRA recommends average price without suggesting slabs and it is the government’s prerogative to set the prices and slabs, give or not to give subsidy. Whatever the government will decide would be notified by OGRA,” Imran Ghaznavi, a spokesperson for the regulator, told Arab News on Friday. 

“OGRA only determines prescribed prices after holding public hearings across Pakistan and taking inputs from all stakeholders, including public and both utility companies.”