Gas prices are poised for a steep increase of up to 100% across various consumer categories, a move aligned with the International Monetary Fund’s (IMF) stipulations to tackle the escalating circular debt issue.
The report details that the proposal for the revised gas tariffs is now ready and has been presented to the Economic Coordination Committee (ECC) for sanctioning.
Insiders revealed that following ECC endorsement, the summary would advance to the federal cabinet for final approval. They indicated, “Following the federal cabinet’s nod, the new tariffs are set to be effective from October 1.”
The circular debt in the gas sector has ballooned to a staggering Rs2,700 billion.
The proposed amendments include a significant price surge for up to 1 mmBtu, escalating from Rs2,000 to Rs3,500. There’s an anticipatory warning that the circular debt could swell by an additional Rs46 billion by this fiscal year’s end if there’s a failure to implement the hike. Consequently, gas companies could encounter a shortfall approaching Rs185 billion.
Furthermore, the draft suggests a notable recalibration in the fixed monthly charges, particularly impacting protected gas consumers.
The strategy implies a massive 100% swell in gas tariffs burdening domestic users, whereas other categories of consumers could see an even more substantial proposed ascent of 198.33%.
This recalibration in tariffs is integral to the interim government’s roadmap to curtail the relentless issues of circular debt and to honour its obligations to the IMF, added the sources.
The informants acknowledged the unavoidable impact of this decision on the country’s inflation, already grappling with unprecedented peaks due to successive fuel and energy tariff augmentations. This scenario has paved the way for soaring food prices. Nonetheless, meeting IMF’s stringent conditions, particularly with the upcoming November tranche, necessitates this difficult step of slashing the gas sector’s circular debt, achievable principally through augmenting gas prices.
