Govt mulls single digit gas tariff hike for domestic consumers

ISLAMABAD: The PTI government is working on the option to keep the hike in gas tariff in single digit (7-8 percent and to 9 percent) for high slab categories of domestic consumers whereas the maximum increase will be passed on to industrial consumers belonging to general industry, power sector, cement, fertilizer and CNG, , a top official at Petroleum Division told The News.

“The government is also considering providing the gas at higher cost to Captive Power Plants (CPPs) and those gas-based plants which are inefficient and running at 30-35 percent efficiency. They are using the local gas at lower prices but their efficiency is at lower side, meaning they are using maximum gas but generating less electricity. And those plants which are efficient will be provided gas at lower price,” said the official.

Under IMF diktat, the government, the official said, is bound to increase the gas prices as recommended by OGRA, but it wants to pass the increase in gas tariff to domestic consumers in single digit to avoid the expected backlash from masses, but will expose the general industry, power sector (Captive Power Plants) fertilizer and CNG sector to the maximum increase to cater to the needs required to fulfill the revenue requirement of both gas companies --- Sui Southern and Sui Northern amounting to Rs557 billion.

‘The final decision is yet to be taken and in next week it is to be finalized and then a summary will be prepared accordingly that will be submitted with ECC for approval.’

OGRA already determined in it’s the December 11, 2019 determination the cost of gas at Rs706.9 per MMBTU and has also worked out the yearly revenue requirement of the Sui Northern for 2019-2020 at Rs274 billion. For Sui Southern, Regulator has determined the cost of gas at Rs759 per MMBTU and has also worked out yearly revenue requirement at Rs283 billion. The average gas cost has been determined by the OGRA stands at Rs737 per MMBTU.

The regulator in its December determination proposed the gas increase for domestic consumers from 14 to 192 percent, but the government wants to keep gas increase in single digit by 7-9 percent.

For domestic sector consumers, the regulator on December 11, 2019 determined the increase in gas price by 192.12 percent for consumers falling under first slab using 0.5 hectors cubic meter (Hm3) per month from Rs121 per MMBTU to Rs 353.46 per MMBTU. And for second slab categories using gas 1 Hm3 has per month, the gas increase was determined at 17.82 percent from Rs300 per MMBTU to RS353.46 per MMBTU.