Gas price in Pakistan will be increased to fulfil IMF’s demand

ISLAMABAD: One month following the imposition of a gas price hike by the caretaker government on the demand of the International Monetary Fund (IMF), the Sui Southern Gas Company (SSGC) has submitted a request to the Oil and Gas Regulatory Authority (Ogra) to further raise gas prices starting July 2024.

Initially, the caretaker government sanctioned a 67% increase in natural gas tariffs effective from February 1, in compliance with the IMF’s directive to meet a deadline by February 15, 2024, as part of the structural benchmark criteria.

In its recent plea submitted to Ogra, SSGC has urged for a hike of Rs274.40 per Metric Million British Thermal Unit (mmbtu) in gas prices, citing an anticipated revenue shortfall of approximately Rs79.63 billion. They proposed setting the average price of one mmbtu gas at Rs1740.80.

A public hearing on the petition is slated for March 18 in Karachi, where Ogra will determine the gas prices. Additionally, Ogra will conduct a hearing in Quetta on March 20.

It’s worth noting that the IMF advocates for biannual implementation of gas price reviews by the government to mitigate circular debt.

In the midst of the ongoing economic challenges, the newly elected government intends to formally request a larger and longer-term bailout package from the IMF under the Extended Fund Facility (EFF) next month. Pakistan is anticipated to seek a fresh IMF bailout package exceeding $8 billion, with the potential for additional financing through climate finance during the upcoming spring meetings of the IMF/World Bank in Washington, DC, scheduled from April 15 to 20.

A Pakistani delegation, led by Finance Minister Muhammad Aurangzeb and including Finance Secretary Imdadullah Bosal, Secretary EAD Kazim Niaz, and Governor of the State Bank of Pakistan Jamil Ahmed, will participate in these meetings.