Govt raises gas prices by 10 to 143%

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Monday approved increases to natural gas prices ranging from 10 to 143 percent.

Varying rate hikes would be applicable to domestic consumers, commercial users, and the industrial, fertiliser, power, cement and compressed natural gas (CNG) sectors.

Gas prices for export oriented sectors such as textiles, surgical products and sporting goods have not been raised.

The increases would help the government in reducing the accumulative losses of the two major gas utilities, Sui Northern and Sui Southern, from Rs152 billion to Rs58 billion, the ECC said. The ECC also approved the reduction of the general sales tax rate on imported liquefied petroleum gas (LPG) to 10 percent.

The Minister for Petroleum, Ghulam Sarwar Khan, said it would bring down the price of a 15kg LPG cylinder, used mostly by the rural poor, by Rs200.

The ECC approved the increase of gas rates for commercial consumers by 40 percent, to Rs980 per one million British thermal units (MMBTU) from Rs700. The prices of gas feedstock for fertiliser manufacturers was increased by about 50 percent, from Rs123 to Rs185 per MMBTU.

The price of gas supplied as fuel to fertiliser manufacturers was increased from Rs600 to Rs 780 per MMBTU. The same hike was applied to fuel supplied to captive power plants operated by general industrial concerns.

The rate for the power generation sector rose from Rs400 to Rs629 per MMBTU, an increase of 51 percent.

For cement manufacturers, the price of gas was increased by 30 percent, from Rs700 to Rs975 per MMBTU. The price of gas supplied to the CNG sector went up by 40 percent, from Rs700 to Rs980 per MMBTU.

The ECC meeting was chaired by Federal Minister for Finance and Revenues Asad Umar, here on Monday.

Talking to reporters after the ECC meeting, Federal Minister for Petroleum Ghulam Sarwar Khan said the accumulated losses of Sui Northern Gas Pipelines Ltd and Sui Southern Gas Co increased to Rs152 billion during the five-year term of the previous Pakistan Muslim League-Nawaz administration.

This left the new Pakistan Tehreek-e-Insaf administration with no other choice but to take the difficult decision to hike gas prices, he said.

The number of gas pricing slabs has been increased from three to seven to protect the poorest consumers, who use only 50 cubic metres a month on average. Their bills would go up from Rs252 a month to Rs 275, an increase of just Rs23, he said. Sarwar said that only 23 percent of Pakistan's population was connected to the piped gas network, while 60 percent used LPG, kerosene, wood and other fuels.

Under the new tariff system worked out by the Ministry of Petroleum, more than 3.56 million consumers falling within the 50-cubic-metre slab would see their monthly gas bills rise by 10 percent. The 2.64 million consumers who use between 50-100 cubic metres of gas a month would see their average bill increase by 15 percent, from Rs480 to Rs551. The 1.74 million consumers using 100-200 cubic metres a month would endure a 20 percent rise in their average bill, to Rs2,216 from Rs1,851.

The 436,000 households using 200-300 cubic metres a month would see their average bill escalate by 25 percent, from Rs2,764 a month to Rs3,449.

The 524,000 consumers using 300-400 cubic metres face a 30 percent hike in their average bill, from Rs9,900 to Rs12,980 a month.

The 226,000 people consuming 400-500 cubic metres a month would suffer a 143 percent escalation in their gas bill, from Rs12,482 to Rs30,339 a month.

Some 237,000 consumers using more than 500 cubic metres of gas a month would also pay a 143 percent premium, reflected by an increase in average monthly billing from Rs14,973 to Rs30,402.

Bulk-meter consumers would be charged the flat, fifth-slab rate of Rs790 per MMBTU.

The total number of piped gas consumers in these seven slabs is about 9,36 million.

Sarwar said that they had reservations about the LNG agreement with Qatar as National Accountability Bureau (NAB) and Federal Investigation Agency (FIA) are investigating it.