ECC approves increase in gas prices by up to 124 per cent

ISLAMABAD: To fulfil the International Monetary Fund (IMF) conditions, the government after increasing the electricity prices has approved skyrocketing raise of up to 124 per cent in the gas prices to generate additional revenue of Rs229 billion but kept the price for lifeline consumers unchanged.

Federal Minister for Finance and Revenue Ishaq Dar presided over the meeting of the Economic Coordination Committee (ECC) of the Cabinet.

During the meeting, the Ministry of Energy (Petroleum Division) tabled a summary on the Natural Gas Sale Pricing FY22/23 and presented the tariff proposals for all the consumer categories in accordance with the RERR FY22/23.

After detailed discussion, the ECC approved the gas price revision proposal for domestic, commercial and power sectors for six months, i.e., January to June 2023.

According to sources, with the implementation of this proposal, the government is likely to recover additional revenue of Rs229 billion.

Under the six protected slabs, up to 0.25 hm3 consumers the price will remain unchanged at Rs121/mmbtu. For consumers up to 1 hm3 price will go up from Rs300 to Rs350 and for up to 2 hm3 from Rs553 to Rs730.

Similarly, for the consumers 3 hm3, the price will be increased from Rs738 to Rs1,250/mmbtu, for users up to 4 hm 3 from Rs1,107 to Rs2,250/mmbtu and for over 4 hm 3, the gas price will go up from Rs1,460 to Rs3,270/mmbtu.

Besides, the consumers of protected category will pay the fix charge of Rs50 and the consumers of non-protected category will pay the fix charge of Rs500.

The major victims of this increase will be power, fertiliser and export sectors. In the export sector, the textile industry will bear the major brunt and the exports may further nosedived.

During the meeting, the Ministry of Economic Affairs presented a summary on G20 Debt Service Suspension Initiative (DSSI). This debt relief was announced in April 2020 for IDA eligible countries to mitigate the socioeconomic impact of the Covid-19.

Under this initiative, the debt relief was extended through the suspension of principle and interest payments. So far, 37 debt rescheduling agreements with 15 creditor countries have been signed. Foregoing in view, the ECC allowed the Ministry of Economic Affairs to sign the debt rescheduling agreement with Russia for debt suspension of the Covid-related amount of $14.53 million.

The Ministry of Poverty Alleviation and Social Safety presented a summary on the enhancement of the Benazir Income Support Programme (BISP) allocations.

The meeting was briefed on the ongoing BISP programmes, including Unconditional Cash Transfer (UCT) programme “Benazir Kafaalat”, covering around nine million families and two Conditional Cash Transfer (CCT) programmes Benazir Taleemi Wazaif and Benazir Nashonuma.

Besides this disbursement of cash assistance to the flood victims, an emergency relief of Rs25,000 was provided to each of the affected family, totalling around 2.7 million families.

In the Conditional Cash Transfer programme, there has been accelerated enrollments in the Benazir Taleemi Wazaif and it is anticipated that an additional one million children will be enrolled by the end of June 2023.

Also BISP has extended CCT Benazir Nashonuma to all the districts of the country. The ECC after discussion granted Rs40 billion as technical supplementary grant to the BISP to meet its budgetary requirements for an increase in the unconditional and conditional grants.

Federal Minister for Commerce Syed Naveed Qamar, Federal Minister for Power Khurram Dastgir Khan, Minister of State for Finance and Revenue Dr Aisha Ghous Pasha, former prime minister Shahid Khaqan Abbasi, Special Assistant to the Prime Minister (SAPM) on Finance Tariq Bajwa, federal secretaries and other senior officers attended the meeting, while Federal Minister for Industries and Production Syed Murtaza Mahmud, Minister of State for Petroleum Musadik Masood Malik and State Bank of Pakistan (SBP) Governor Jameel Ahmad attended the meeting virtually through the video-link.