Govt may hike gas prices by another 10-15pc to slash circular debt

ISLAMABAD: Knowing the fact that this time the government will collect revenue of Rs980 billion in the ongoing FY24 on account of the massive hike in gas prices by up to 193 percent, the IMF has still asked the government to further increase the sale price of natural gas from January 1, 2024 to slash the circular debt that currently stands at Rs1,250 billion.

“The authorities are contemplating an increase in the natural gas sale price by 10-15 per cent, which will yield Rs100 billion additional revenue. It is to be used for slashing the natural gas circular debt. However, the final decision to this effect has not been taken so far. Maybe the gas price will increase by just 5 per cent to generate Rs50 billion,” senior government officials of the Energy Ministry told The News.

With the massive rise in gas price by up to 193 per cent from November 1, 2023, the government will have surplus revenue of Rs275 billion which will be consumed in paying the Rs210 billion cost to be incurred against the RLNG diversion to domestic sector in the ongoing winter season. It also offsets the loss of Rs65 billion incurred due to failure of the government in notifying gas price hike four months late.

The gas companies, Sui Southern and Sui Northern, will submit their petitions with the OGRA seeking adjustment in gas prices from January 1, 2023, which will most probably ask for a downward revision of gas prices. But the Fund wants the government to further increase gas prices by 10-15 per cent from January 1, 2024. The Fund pinpointed that the government has failed to hike the gas tariff biannually for the last 10 years since 2013, causing a massive buildup in the gas circular debt.