ECC approves major gas price hike

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has increased gas prices for domestic, commercial, and compressed natural gas (CNG) users and other categories of cement manufacturers.

Caretaker Finance Minister Dr Shamshad Akhtar chaired the ECC meeting that approved the revised gas prices recommended by OGRA, effective November 1, 2023.

The decision comes after a meticulous evaluation of the nation’s energy landscape.

In a press release, the ECC said that the gas price hike aims to address critical challenges, including dwindling natural gas reserves, the soaring costs of imported fuel such as liquid natural gas (LNG), a devalued currency, and pervasive inflation.

These factors have significantly escalated the expenses associated with gas exploration, production, distribution, and transmission, the ECC said.

The ECC said that the previous administrations opted for controlled pricing rather than bolstering regulatory mechanisms, leading to financial quandaries and circular debt.

“This strategic price adjustment is designed to rectify a situation where profitable businesses disproportionately benefited from low gas prices, leaving lower-income individuals and industries at a disadvantage.”

It poses a formidable challenge for the caretaker government, which must strike a delicate balance between affordability and the sustainability of the supply chain, especially in light of Pakistan’s commitment to an International Monetary Fund (IMF) programme that abolished subsidies.

This marks the first increase in natural gas prices in 2.5 years. Without this adjustment, the circular debt would have experienced a substantial surge, underscoring the critical nature of this decision.

The government’s objective is to ensure practical and targeted affordability, focusing on safeguarding both consumers and businesses.

Currently, only 30 per cent of households in Pakistan have access to piped gas, leaving a significant portion of the population reliant on alternative sources.

The gas prices have been adjusted to shield the most vulnerable while ensuring affordability for middle-income households, striking a balance that is vital for the nation’s economic equilibrium.

Updated Gas Charges Pakistan

Noteworthy exemptions include the pricing for gas supplies to Roti tandoors (bread-making ovens), which remain unaffected to guarantee food security, and fertiliser prices, aligned with the cost of gas from the Mari gas field, to support the agricultural sector.

Furthermore, industry tariffs have been restructured to create a level playing field across regions and discourage inefficient gas use in specific sectors.

The government is also actively encouraging the adoption of liquefied natural gas (LNG) and re-gasified liquefied natural gas (RLNG) in various categories due to their efficiency and cost-effectiveness.