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Sunday June 23, 2024

If WACOG formula implemented: 91pc hike in average gas tariff for domestic consumers likely

On April 17, the prime minister constituted the committee for recommendations to implement WACOG for reduction of gas tariff for industrial

By Khalid Mustafa
May 01, 2024
This photo shows the flames of a lit burner of a gas stove. — AFP/File
This photo shows the flames of a lit burner of a gas stove. — AFP/File

ISLAMABAD: The implementation of Weighted Average Cost of Gas (WACOG) in gas tariff by blending imported RLNG and local natural gas would cause an average tariff raise by over 91 percent of domestic consumers to Rs2,300 per unit from Rs1,200 per mmbtu.

However, the gas tariff for industrial, including fertilizer and commercial sectors, is estimated to decrease by 25 percent — a figure which is yet to be firmed up. The electricity power tariff would tumble by Rs1.80 per unit because of 25pc decline in the wake of blended gas supply to the power sector if WACOG gets implemented, top official of the Energy Ministry told The News.

When asked why impact of 25pc decrease in gas tariff for power sector has been estimated to reduce power tariff by just Rs1.80 per unit in basket tariff price, the official said power generation based on RLNG stands at just 5pc in the total power generation. The total power generation is mix of electricity from nuclear, hydel, wind, bagasse, coal (local and imported) RLNG, furnace and diesel. “We have worked out the initial estimates about the impact of WACOG formula if implemented,” the official said. This subject is very sensitive as the real platform for the decision on WACOG is CCI (Council of Common Interests), and in the past, three provinces — KPK, Balochistan and Sindh — used to oppose WACOG initiative,” he added. “We are in the process of finalising estimated impacts of WACOG formula while determining gas tariff for domestic and various sectors of economy for the 11-member committee,” he said. The committee will comprise Minister of Petroleum as convener and Minister for Power, Minister for Industries, Power Division Secretary and Industries and Production Secretary as members.

The four provincial chief secretaries will also be members of the committee, while the Petroleum Division Secretary will act as secretary of the committee, he said.

On April 17, the prime minister constituted the committee for recommendations to implement WACOG for reduction of gas tariff for industrial, commercial and power sectors. The objective was to reduce input cost of export and non-export industry to stimulate industrial activities in the country.

The sitting government is highly tilted towards implementation of WACOG while determining gas tariff by blending local natural gas with imported RLNG, mainly to bring down gas tariff for industrial sector in Punjab, high-end domestic consumers and RLNG-based power plants.