Interim govt anticipates ‘slight economic revival’, warns of gas price hike

ISLAMABAD: Caretaker federal ministers struck a cautious tone during Friday’s press conference, acknowledging minor “signs of economic recovery” while cautioning about a looming gas tariff increase and the revision of federal and provincial development programmes to create additional fiscal space.

According to Dawn.com, in a joint press conference with Power and Petroleum Minister Muhammad Ali and Information and Broadcasting Minister Murtaza Solangi, Finance Minister Dr Shamshad Akhtar emphasised that the caretaker government had inherited a set of challenges and was addressing them cautiously by controlling expenditures and enhancing revenues.

“This is our path to gradual improvement. We are witnessing some initial signs of economic recovery,” she stated, citing the decline in the consumer price index (CPI) from 38 per cent in May to 27.3 per cent last month.

“We have already overcome certain difficulties, and price stability will continue to improve,” she added.

Furthermore, Dr Akhtar noted that productive sectors, including agriculture, had shown improvement, with expectations of increased crop yields contributing to growth prospects.

Altough, some concerns had been raised about the industrial sector, she pointed to data indicating improvement, including increased sales of cement and other commodities.

Meanwhile, data from the All Pakistan Cement Manufacturers Association revealed a 37 per cent increase in domestic cement sales during the first two months (July to August) of the current fiscal year compared to the same period last year.

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“The services sector is thriving at this point,” the minister commented, highlighting government efforts to collaborate with the Special Investment Facilitation Council to enhance foreign direct investment.

Government proposes gas tariff hike 

In a recent address, the Minister for Power and Petroleum Muhammad Ali shed light on the precarious state of the gas sector, which is grappling with an “unsustainable” circular debt issue. This debt crisis is attributed to the stagnant development of the sector over the past decade, resulting in a significant financial gap amounting to PKR5.4 trillion – PKR2.5 trillion in the power sector and PKR2.9 trillion in the gas sector.

Despite the government’s efforts to alleviate the financial burden on consumers, the minister emphasised that the circular debt was of such magnitude that it could not be absorbed by the government without adversely affecting the public.

As part of the proposed plan for gas tariff rationalisation, rates are set to increase for all consumers. Approximately 60 per cent of urban consumers will experience an increase ranging from PKR200 to 400 per unit, while affluent consumers will bear the highest costs.

The minister stressed the government’s desire to promote the gas industry but highlighted the unjustifiable price disparities. He noted that the price gap ranged from PKR1,700 to 3,700 per unit for SNGPL consumers and PKR1,100 to 1,700 per unit for industrial consumers of SSGCL.

Furthermore, Ali pointed out that the government was purchasing gas at $12.5 (equivalent to Rs3,700) per unit and selling it to consumers at an average rate of PKR1,100 per unit, a practice deemed unsustainable.

In light of these challenges, Ali underscored the need for comprehensive reform in the pricing structure and pledged the government’s commitment to maintaining, if not improving, the gas management mechanism from the previous winter.