The government approved a substantial increase in gas tariffs on Monday.
Chaired by caretaker Finance Minister Dr Shamshad Akhtar, the Cabinet’s Economic Coordination Committee (ECC) convened in the federal capital, sanctioning an increase in gas tariffs by up to 193%.
The new gas tariff, effective from November 1, 2023, precedes the International Monetary Fund’s (IMF) review later this month, which has pressured Pakistan to reduce its escalating circular debt within the energy sector.
Following the ECC’s endorsement, tariffs for protected consumers have increased from Rs10 to Rs400, while non-protected consumers will experience hikes from Rs460 to Rs1000, extending up to Rs2000 for higher slabs. Specifically, local gas tariffs have surged by 173% for non-protected domestic users, 136.4% for commercial consumers, 86.4% for exporters, and 117% for non-exporting industries. Notably, exporters appear to benefit the most, facing a lesser increase of 86% starting November 2023.
Initially, the proposal aimed for the revised tariffs to be implemented from October 1, 2023, but the ECC’s approval has postponed this to November.
ECC’s Focus on Various Economic and Structural Measures
The meeting, encompassing various agenda items, included summaries from several ministries, notably a submission from the Ministry of Industries and Production. The detailed plans to secure urea supply for the 2023-24 Rabi season, with the ECC green-lighting the immediate import of 200,000 tonnes of urea fertilizer. The committee also mandated a consistent gas supply to the fertilizer sector and advised provinces to actively participate in bearing import costs.
Additionally, discussions extended to a request from the Earthquake Reconstruction and Rehabilitation Authority (ERRA) seeking a Technical Supplementary Grant of Rs484 million. This fund will sustain pay and benefits for 415 contract and project employees from July 2023. The ECC has tasked the Ministry of Planning, Development, and Special Initiatives with pinpointing savings to finance these ERRA personnel expenditures.
In a significant stride toward bolstering small and medium enterprises (SMEs), the meeting concluded with the ECC approving a proposal from the Ministry of Finance. This initiative aims to establish the National Credit Guarantee Company Limited, enhancing credit support for SMEs nationwide.
