ISLAMABAD: Despite a staggering loss of Rs 2.1 trillion in the gas sector, Energy Minister Muhammad Ali on Tuesday said that the government would give a subsidy of approximately Rs 384 billion to offset the impact of the hike on the gas consumers.
On Tuesday, in a press conference along with Minister for Information and Broadcasting Murtaza Solangi, the energy minister defended the government’s decision pertaining to a massive hike in the gas prices for various categories of gas consumers, citing the move as necessary for the country’s economic stability. The energy minister acknowledged a staggering loss of Rs 2.1 trillion in the gas sector, with Rs 879 billion attributed directly to gas-related issues. To counteract the impact on consumers, the government plans to offer a substantial subsidy of approximately Rs 384 billion, the energy minister said.
Energy minister said government was forced to increase gas prices to rescue the gas utilities from the revenue deficit for the fiscal year 2023-24.
He said that diversion of imported gas and inadequate gas pricing by the previous government had resulted in a circular debt stock of Rs. 2.1 trillion (excluding interest).
He hoped that adjustment in gas prices in line with decisions of the Oil and Gas Regulatory Authority (OGRA) would help cut the growth of circular debt, mitigate inflation, control interest rates, and decrease fiscal deficits.
He also hoped that new gas prices would result in attracting international companies to invest in exploring indigenous oil and gas.
According to energy minister, domestic, tandoor and fertilizer sectors will receive subsidies and the objective of giving subsidy was to protect the consumers from the impacts of inflation.
Energy Minister said that domestic sector would receive Rs 139 billion gas subsidy, fertilizer sector Rs 45 billion and Rs 200 billion to Roti tandoors.
He claimed that the monthly bill of protected class would remain below Rs.900 while consuming 0.9 hm3 in a month.
Regarding fertilizer sector, the energy minister said that gas price for fertilizer was kept at Rs.580 per mmbtu in line with Mari Gas cost.
He said that government raised price by Rs.70 only compared to the previous year to protect farmers and ensure food security in the country.
He said government had developed a Regionally Competitive Energy Tariff (RCET) in consultation with all key stakeholders keeping in view the situation in India, Bangladesh, and Vietnam.
These three countries had emerged as net exporters of goods and services.
Government is focusing on conserving gas in those sectors which were inefficient or they had alternate fuels.
He also pointed out over 50% of commercial consumers were already using LNG, and over 27% of CNG connections are based on RLNG.
He claimed again 57% of domestic gas connections were in the protected category who were receiving subsidized gas.
He further said that a fixed monthly bill of Rs. 400 had been introduced to ensure affordability.
Now, the fixed bill has been increased from Rs 10 to Rs 400 for the 5.7 million gas consumers.
He said that around 93% of gas consumers were paying gas price lower than the actual cost of gas while as many as 57% of households primarily consumed 31% of the total gas and they account for 11% of payments.
The upper class make 3% of gas connections and use 17% of the gas and they incurred a 39% billing rate, said energy minister.
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