By Staff Reporter
ISLAMABAD: The caretaker government raised natural gas prices by up to 67% for some consumers on Thursday, meeting a key demand of the International Monetary Fund (IMF) before a review of its $3 billion bailout program.
The cabinet approved the increase on Thursday, effective from Feb. 1, to cover the revenue shortfall of the state-owned gas utilities, Sui Northern Gas Pipelines Ltd. and Sui Southern Gas Co., according to a statement from the prime minister’s office.
The hike will affect about 43 percent of the gas consumers, mostly in the higher-income brackets, while the rest will see no change in their tariffs, the statement said.
The move is expected to generate an additional Rs133 billion in revenue for the gas companies, which are facing mounting debt and losses due to low tariffs and theft. The IMF has made the revision of gas prices one of the benchmarks to assess Pakistan’s economic performance and fiscal discipline.
Pakistan secured the IMF loan in July 2023 to avert a balance-of-payments crisis.
The gas price hike is the second one by the caretaker government, which took over in August after the parliament completed in 5-year term.
The government had raised gas prices by up to 172 percent for various sectors, including domestic, industrial, and commercial consumers, in November, sparking protests and inflation.
The latest increase will have a weighted average impact of 11 percent on gas consumers, according to Tahir Abbas, head of research at Arif Habib Ltd., a Karachi-based brokerage. He said the hike will also affect the fertilizer sector, which saw its gas tariff increased by 715 percent.
“The gas price hike will have a negative impact on the inflation, which is already high due to food and energy prices,” Abbas said.
Pakistan’s inflation rate eased to 28.30 percent in January from 29.66 percent in December but remained above the central bank’s target range of 24-25 percent. The State Bank of Pakistan has kept its policy rate unchanged at 22 percent since April 2022, citing inflationary pressures and an uncertain economic outlook.
Copyright © 2021 Independent Pakistan | All rights reserved
