The caretaker government has approved up to 45% increase in the tariffs of the natural gas to fulfill the revenue requirements aligning with demands from the International Monetary Fund (IMF).
The decision was taken during a meeting of the Economic Coordination Committee (ECC) of the Cabinet on Wednesday under the leadership of Finance Minister Dr Shamshad Akhtar.
The new tariff will be effective from February 1, 2024.
The ECC decided to adjust the proposed tariff increases suggested by the Petroleum Division, ensuring consistency with the revenue needs of Sui companies.
According to the Petroleum Division, the estimated revenue requirements for the current fiscal year stand at Rs. 592 billion for SNGPL and Rs 310 billion for SSGCL, totaling Rs 902 billion.
In response to the government’s commitment to the IMF, the ECC has allowed a Rs 50 per unit increase for protected domestic consumers, with consumption below 0.25 hundred cubic meters (hcm), bringing the rate to Rs 170 per mmBtu.
Similar increases ranging from 40% to 45% have been permitted for other protected consumer brackets, with adjustments made to distribute the impact across sectors such as fertilizers and industry.
Non-protected residential consumers will also experience a tariff hike of up to 27%, with rates increasing by Rs. 250 to Rs. 350 per unit.
Furthermore, uniform gas tariffs for fertilizer plants have been recommended, with directives issued to investigate recent urea price increases and ensure price stability in the market.
In addition to the gas price adjustments, the ECC approved proposals from the Federal Board of Revenue (FBR) and the Finance Division, including the rationalization of sales tax rates on locally manufactured vehicles and the approval of technical supplementary grants for various projects.
The revised gas tariff rates will be shared with the IMF following formal approval by the federal cabinet, demonstrating the government’s commitment to meeting its program benchmarks and financial obligations.
government should focus on growth of export business. how long will rely on IMF world bank loans.