Govt to hike gas prices to shift heating system to electricity

ISLAMABAD: The government has made up its mind to further increase the gas prices to force people to shift from gas-based space heating system to grid electricity-based in the winter season. To this effect, a committee, headed by Petroleum Minister Musadik Malik and comprising Nepra chairman, secretaries of Power and Petroleum divisions, has been constituted.

The prime minister constituted the committee in the last week of July, and it would submit its recommendations to him next month.

“The committee will hopefully meet for the first time in the current or next week on how to shift gas-based space heating system to electricity-based by jacking up gas rates and in return what electricity rates are to be offered to people for space heating in the winter season,” top officials of the Energy Ministry privy to the development told The News.

“There are 12 slabs of gas consumer categories and the last category consumers of above 4hm3 are paying gas price of Rs4,200 per MMBTU, which is much higher than the ring-fenced price of imported RLNG. The authorities are working to escalate the gas prices of all remaining consumers who fall in the first 11 slabs, including protected and non-protected consumers.”

The government is going to take this measure aiming at discouraging the use of gas for space heating in the winter season, keeping in view depletion of gas reserves and diverting local gas to the power sector for cheaper electricity generation. This will result in reduced power tariff and resolve the issue of capacity payments which have increased to Rs2.2 trillion for the ongoing financial year 2024-25.

“There is a proposal that electricity be provided to masses for space heating purposes at the rate of base tariff, which is Rs35.50 per unit. This is how the electricity consumption will increase in the winter season, which will also help the Power Division handle the issue of capacity payments which swell in the winter season when power consumption steeply tumbles to the range of 9,000-12,000 MW from 25,000 MW in peak summer.”

However, officials said the proposal of providing electricity at its base tariff has not yet been finalised for space heating purposes. Top authorities in the Power Division are also at present working on this particular issue and also the winter package for the industrial sector. In the past, the Power Division after getting the nod from ECC and federal cabinet used to extend electricity at lower rates to the industrial sector on incremental increase of electricity use during the winter months to tackle the capacity payments issue that has virtually turned into a monster. Right now, the electricity consumers are paying Rs18.39 per unit in tariff in the head of capacity payments.