The government has increased gas prices by up to 143pc. The price hike has been done for recovering rupees ninety-four billion from the consumers, in effect cutting down on the subsidies that were a financial drag on the government’s budget.
The price hike might make the gas utility firms financially practical however it would be stoking inflation owing to an increase in the price of items.
The decision would be causing harm to nearly 9.4 million domestic users—among which 3.6 million of the consumers falls in the lowest income category and another 2.63 million in the second lowest income category.
Owing to the increase in gas prices for the power division, the electricity would also become costlier by 12 per cent.
The Economic Coordination Committee (ECC) of the cabinet permitted an increase in the gas prices for local consumers in the range of 10 per cent for the lowest category of consumers to 143 per cent for the highest category of local consumers.
It also has given approval for raising gas prices for the commercial and industrial consumers from 30 per cent to 57 per cent that would be increasing the prices of fertiliser, electricity generation, compressed natural gas (CNG), cement and manufacturing units. However, it has protected five export-oriented divisions from the hike.
The decision would be implemented from the date of approval of the ECC decision by the federal cabinet. In the coming weeks, an increase of 143 per cent in gas prices is anticipated to follow around a 35 per cent increase in electricity prices in the coming weeks.
The Oil and Gas Regulatory Authority (OGRA) had suggested raising the gas prices by up to 186 per cent for meeting the revenue deficiency being encountered by the Sui Southern Gas Company Limited (SNGPL) and the Sui Southern Gas Company Limited (SSGCL).
Owing to the decision of ECC, the merged revenue deficit of the two gas utilities would be reducing from rupees 152 billion to rupees 58 billion, as per the secretary of Petroleum Division.
This proposes that the gas consumers would be paying an additional rupee 94 billion in the current financial year to gas utilities.