Expensive gas

Ogra has decided to increase gas prices by an average of 46 percent from July 1. The biggest hit will be taken by domestic consumers, who will pay 186 percent more per unit of gas consumed. If there’s any consolation, early reports had indicated that Ogra is set to increase gas prices by an astonishing 300 percent for domestic consumers. Industrial consumers are now set to face a hike of 30 percent or more. The anger over this decision is justified. This is the kind of measure that speaks to the complete absence of any sort of coherent pricing policy on the part of policymakers in the energy sector. Even if the argument that the PML-N ‘artificially’ kept gas prices down is held up, there is no justification for such a price hike in the absence of a political government. Energy pricing has a significant political component – and this includes price hikes. Calling pricing ‘artificial’ is a shallow line of argument that supports a particular political approach to energy pricing. The relevant question is what political perspective is determining energy pricing, not how to determine prices without politics playing a part. Interestingly, the Ogra chairman and senior officials left for a three-week trip to the US after forwarding the pricing to the government.

What is more interesting is that the argument from the gas officials has been couched in political terms. Gas consumers are expected to bear the cost for new gas schemes launched by the government to gain votes. Even if such a political decision was made, there is no reason why the cost must be borne by gas consumers. The politicians responsible should bear the cost out of their pockets if it involved corruption – but if no corruption was involved, launching new gas schemes is part of the legitimate agenda of any political government. Such projects must be borne out of developmental funds that can either be a general allocation or, specifically, be allocated within funds for gas supplies. The trouble is that the approval for the hike can be traced to ex-PM Shahid Khaqan Abbasi who approved the collection of Rs117 from gas consumers through four instalments in the government’s last month in power. This confirms that the fiscal problems facing Pakistan are deep and governments continue to play a difficult game of balancing political objectives and the country’s balance sheet. The Ogra price hike confirms that the only ones to suffer the brunt of these decisions are end consumers.