The federal government has given approval for an increase in natural gas prices for various consumer categories, as recommended by Ogra.
Chaired by Prime Minister Anwaarul Haq Kakar, the federal cabinet has approved an increase of up to 172% for domestic consumers, a 137% increase for commercial consumers, and a 193% increase for cement manufacturers. The new prices will come into effect on November 1.
The decision to raise gas prices was initially given the green light by the Economic Coordination Committee (ECC) on October 23. The ECC cited the diminishing natural gas reserves in the country, depleting at a rate of 5 to 10 percent annually. The government has incurred a growing financial burden due to the need for gas importation, resulting in the accumulation of a recurring debt of Rs 2.1 trillion, primarily due to the previous lack of adjustments in gas prices.
The Ministry of Energy has acknowledged that even highly profitable businesses have been utilizing natural gas at lower rates, making the decision to raise gas prices a challenging one for the caretaker government. It’s important to note that the last gas price increase occurred approximately two and a half years ago, resulting in revenue of 461 billion rupees for the national exchequer.
The Ministry of Petroleum Division has provided details of the price adjustments. Gas prices will remain unchanged for protected consumers using 25 to 90 cubic meters per month, although fixed charges for these protected consumers have been raised.
Read More: Gas Prices Expected to Surge By Up to 193%
For users consuming 25 cubic meters per month, the gas price has increased from Rs 200 to Rs 300 per mmbtu. Those consuming 60 cubic meters per month will see a price increase from Rs 300 to Rs 600 per mmbtu. Monthly consumption of 100 cubic meters will now cost Rs 1000 per mmbtu, up from Rs 400.
Initially, the Federal Cabinet had deferred the decision on gas prices during an ECC meeting, requesting a review of the matter. However, the Ministry of Petroleum later clarified that, as per the ECC’s declaration, gas prices would indeed be raised. This decision is expected to have significant implications for both businesses and consumers.