ISLAMABAD: To implement a significant prior condition imposed by the International Monetary Fund (IMF) for reaching a staff-level agreement with Pakistan, the Economic Coordination Committee (ECC) of the Cabinet on Monday approved an increase in gas tariffs overall of up to 124% for a period of six months.
The Ministry of Energy’s Petroleum Division presented tariff proposals for all consumer categories in accordance with the Review of Estimated Revenue Requirement (RERR) for the fiscal year 2022–2023, according to a statement from the Finance Ministry. The statement read, “The ECC after careful consideration approved gas price revision proposal for residential, commercial, and power sectors for six months [January to June, 2023].”
Reforms in the energy sector and managing the circular debt were still at the top of the list of issues discussed during the 10-day talks with the IMF mission in Islamabad last Thursday. The IMF delegation left Islamabad without concluding an agreement and demanded that Pakistan implement reforms. The price has increased by 50 rupees, or 16.6%, to Rs350 per MMBTU for households using up to 100 cubic meters of gas per month. The price per MMBTU for domestic customers who use 200 cubic meters has increased by 32% to Rs730.
The price per MMBTU for households using more than 400 cubic meters of gas has increased by 124% to Rs3,277. The price of gas for commercial consumers has increased from Rs. 1,283 per MMBTU to Rs. 1,650 per MMBTU, a 28.6% increase. Following a 22.8% increase, the cost of gas for the power sector has gone up from Rs. 857 per MMBTU to Rs. 1,050 per MMBTU. The rate for the export sector has increased by 34%, to Rs 1,100 per MMBTU. Following a 31% increase, the CNG sector will be required to pay Rs 1,800 per MMBTU. The price of gas for the fertiliser industry has increased by 46% to Rs. 1,500 per MMBTU. Per MMBTU, the cement industry will pay Rs. 1,500.
Meanwhile, , the cabinet committee approved the Ministry of Economic Affairs’ request to sign a debt rescheduling agreement with Russia in order to suspend the $14.53 million COVID-related debt. Following the ministry’s presentation of a summary of the G-20 Debt Service Suspension Initiative (DSSI), the approval was granted. For IDA-eligible nations, this debt relief was announced in April 2020 as a way to lessen the socioeconomic effects of COVID-19. Principal and interest payments were stopped as part of this initiative, extending debt relief. 37 debt rescheduling agreements have been signed thus far with 15 creditor nations. Benazir Income Support Programme (BISP) received a Rs. 40 billion Technical Supplementary Grant from the ECC to meet its budgetary needs for an increase in grants, both unconditional and conditional.
