If greenlit by the PM, the proposed tariff hike will break the budgets of households and businesses alike.
By Staff Reporter
ISLAMABAD: Households and businesses will alike see their fuel bills swell if Prime Minister Shehbaz Sharif okays a proposal to hike gas prices for both households and industries.
The proposal, greenlit by the Economic Coordination Committee (ECC), looks to jack up gas prices for domestic consumers in the range of 43 percent to 335 percent and reduced the number of slabs from seven to five with immediate effect.
Likely to be tabled for approval at the next cabinet meeting, the proposal further seeks higher gas prices for the zero-rated export-oriented industry from USD 6.5/MMBTU to USD 9/MMBTU. Increase in gas prices for fertiliser, power, CNG, and cement sectors are also sought.
The official summary presented before the ECC proposed a revision of the existing slab structure by consolidating some slabs to bring the total number of slabs from 7 to 5.
The slab up to 0.4 hm3 is proposed to be merged with slab up to 0.5 hm3 and the rate for the merged slab is proposed to be PKR 173/MMBTU. There will be no minimum charge in the domestic category.
The proposal seeks no change in the price for the slab up to 1 hm3.
Up to 0.5 hm3, the existing price stood at PKR 121 per MMBTU which will be jacked up to PKR 173.MMBTU, calculating to a 43 percent increase. Up to 1 hm3, the price will remain unchanged at PKR 300 per MMBTU.
For the slab covering from 1 hm3 to 2 hm3, the existing price stands at PKR 553 per MMBTU, which will be increased to PKR 696 per MMBTU, a 26 percent surge.
From 2 to 3 hm3, the existing price of PKR 737 per MMBTU will be jacked up to PKR 1836 per MMBTU, an increase of 151 percent. From 3 hm3 to 4 hm3, the existing price of PKR 1107 per MMBTU will be jacked up to PKR 3712 per MMBTU, or surging by 335 percent.
The proposal seeks all slabs falling in this category of consumers to be merged into one because 95 percent of domestic gas consumers fall in the last slab of existing structure. The price for all roti tandoors will be equal to the Average Prescribed Price of PKR 928/MMBTU).
A raise of 81 percent in existing price has been proposed for commercial consumers. The alternate fuel for commercial consumers is LPG, which is 4 times the cost of indigenous gas in terms of energy units. However, the proposed raise in price is still much lower than LPG price (58 percent of LPG price only).
Zero-rated earlier, the export industry in Punjab is provided RLNG on the subsidised rate of USD 6.5/MMBTU subject to provision of budgeted subsidy.
For the next fiscal year the amount of subsidy allocated for this purpose in the budget is PKR 40 billion. Finance Division has advised that the rate charged to the Export Industry in Punjab may be adjusted accordingly. The existing price of USD 6.5/MMBTU has therefore been proposed to be revised to USD 9/MMBTU.
The non-export industry in Punjab is charged the full price of RLNG. Through a separate proposal, the priority order is going to be adjusted to make it possible to provide indigenous gas to the export and non-export industry in Punjab.
Whenever that becomes possible, the export and non-export industry in Punjab will be charged the same rates for the supply of gas as notified by OGRA.
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