ISLAMABAD: The caretaker federal cabinet on Monday sharply increased the natural gas tariff by up to 172pc for domestic consumers, tandoors and general industries, including export-oriented sectors, captive power plants, CNG and IPPs, and commercial sectors.
Caretaker Prime Minister chaired the cabinet meeting. The new prices will be effective from November 1. The substantial increase was aimed to comply with the International Monetary Fund (IMF) demand, which asked the government to increase gas tariffs to control the gas sector’s circular debt which is Rs2.1 trillion.
This is the second time in 2023, that the government has hiked the gas tariff. Earlier in January 2023, it had increased the gas tariff by up to 112 percent. Petroleum Minister Muhammad Ali also claimed that the addition to the pile of circular debt had stopped after the new tariff hike.
The Ministry of Energy (Power Division) issued a notification after the meeting of the federal cabinet. Interestingly, it claimed, “The government has completely unchanged the sale price for gas supplies to Roti tandoors because “Roti” is a prime and foremost necessity,” but in reality, the numbers tell a different story. As per the notification, the tariff has been fixed for all consumer categories for tandoors at Rs697/mmBtu, before this increase for up to 1 hm3 per month consumers, the tariff was only Rs110/mmbtu depicting an increase of 543 percent. Similarly, for the slab of 2 to 3 hm3 per month, the tariff was 220/mmbtu (increase of 262 percent) and for consumers of over 3hm3 per month, the tariff was Rs700.
For the protected category, the tariff has been kept unchanged, but fixed charges (if they consume gas or not) are Rs400/month, earlier it was only Rs10. The protected category comprises consumers whose average consumption in the last four winter months (Nov to Feb) shall be below or equal to 0.9 HM cube per month.
For unprotected categories, the consumer category of up to 0.25 HM cube/month consumption was charged Rs200/mmbtu and now it has been increased to Rs300, depicting an increase of 50 percent. Similarly, up to 0.6HM cube/month, the consumption tariff has been increased by 100 percent to Rs600/MMBTU; for up to 1HM cube/month consumer category, the tariff has been increased by 150 percent to Rs1000/MMBTU and for up to 1.5HM cube/month consumption, a 100 percent increase has been made and fixed the price at Rs1200/mmbtu. The fixed charges for this category (0.25 to 1.5HM cube) have been increased to Rs1000/month, earlier it was Rs460.
Likewise, for up to 2HM cube category, the government made a 100 percent tariff increase to Rs1600 from the previous Rs800/mmbtu. Among the domestic sector categories, the highest increase of 172 percent was made for up to 3HM cube/month consumers and has been fixed at Rs3000/mmbtu; earlier it was Rs1100/mmbtu. Similarly, for up to 4HM cube/unit consumers, the tariff has been increased by 75 percent to Rs3500/MMBTU, and likewise, for above 4HM cube/month consumers, the tariff was hiked by 29 percent to Rs4000/MMBTU. For the slabs between 2HM cube and above, the fixed charge will be Rs2000/month.
The CNG sector offtake rate has been increased from Rs1805/mmbtu to Rs3600/mmbtu, depicting an increase of 99.4 percent. For captive gas users (export-oriented), the tariff has been increased to 2400/mmbtu from Rs1,100/MMBTU. For captive (general industry), the gas tariff has been increased to Rs2500/mmbtu from Rs1100/mmbtu. Captive plants are those that have been established by an industrial undertaking/unit to produce power for their own consumption and or sell the surplus to DISCOs or bulk power consumers.
For general industries, the tariff has been increased from Rs1200 to Rs2100/mmbtu. Similarly, for export-oriented industries, the tariff has been increased to Rs2200/mmbtu from earlier Rs1100/mmbtu.
For the power sector including K-Electric’s power stations, the bulk tariff has been kept unchanged at Rs1050/mmbut. Previously, in January 2023, the government had increased it from Rs857 to Rs1050. However, for liberty power, the gas tariff was increased to Rs3890/mmbtu against earlier Rs1500.
For all established commercial units, the tariff has been increased by over 136 percent to Rs3900/mmbut from earlier Rs1,650/MMBTU. The commercial units include those with local authorities or those dealing in consumer items for direct commercial sale like cafes, bakeries, milk shops, tea stalls, canteens, barber shops, laundries, hotels, malls, places of entertainment such as cinemas, clubs, theatres and private offices, corporate firms, and ice factories.
For the cement sector, the tariff has been increased by over 193 percent to Rs3,900/MMBTu from earlier Rs1,500/MMBTU.
For the fertilizer sector too the tariff has been minutely increased. The gas feed-stock price for Engro has been changed to Pakistani rupees and fixed it at Rs200/mmbtu, earlier it was $0.7/mmbtu. For Fauji Fertilizer Bin Qasim Limited, the feed stock price increased from Rs510 to Rs580/mmbtu. However, gas used as fuel for generation of electricity, stem and for using in its housing colonies which was Rs1500/mmbtu for these fertilizer companies has been increased to Rs1580/mmbtu.
The Petroleum Division said the caretaker government grappled with pricing, aligning affordability with supply chain sustainability, adhering to IMF programme policies eliminating subsidies. The first price increase in 2.5 years added Rs461 billion in FY22-23. Disregarding OGRA’s advice may further inflate circular debt by Rs400 billion. Objectives include a sustainable supply chain, affordability for protected consumers and businesses, and enhancing gas access for efficient users.
Approximately 57% of domestic gas connections remain in the protected category without price increases. A fixed Rs.400 monthly bill ensures the protected class’s total monthly bill doesn’t exceed Rs.900 for 0.9 hm3 consumption.
Fertilizer prices are tied to Mari gas field costs to support farmers and food security. Industry tariffs aim to level the playing field between North and South regions. A Regionally Competitive Energy Tariff (RCET) considers India, Bangladesh, and Vietnam. The goal is to discourage captive usage and maintain higher prices for non-export customers. Measures target inefficient gas usage, with over 50 percent of commercial consumers using LNG and 27 percent of CNG connections being RLNG-based, offering significant cost-efficiency compared to petrol.
The federal cabinet also approved Haj Policy-2024 and deferred approval of a summary regarding increase in tariffs of natural gas.
Briefing newsmen on decisions taken by the cabinet, caretaker Information Minister Murtaz Solangi said that under a dedicated quota for Haj 2024, a total of 179,210 pilgrims from Pakistan would be able to perform the pilgrimage. Solangi was flanked by interim ministers Sarfraz Bugti, Jamal Shah and Dr Nadeem Jan.
He said that the quota had been equally divided between the government and private schemes. He said that for the first a short duration 20 to 25-day stay package would also be introduced, with the cost to be determined later.
He said the 38 to 42-day Hajj package would account for Rs1,065,000 for the Southern Region and Rs1,075,000 for the Northern Region, which were Rs100,000 less than those of the previous year. The minister said the Road to Makkah Project facility would be available at the Islamabad Airport for Haj 2024, and it would soon be extended to Karachi and Lahore airports also.
As per Haj Policy, the sponsorship scheme under which Haj expenses would be paid in foreign exchange would also remain intact. However, the minister said a few issues regarding Haj policy have been referred to a committee to work out some technical details.
As regards the Pakistan International Airlines, he said steps were being taken to improve its situation. To a query, he said illegal immigrants would be repatriated to their countries from the nearest holding centers.
Solangi said the cabinet also reviewed the decisions of the Economic Coordination Committee (ECC) made on October 23 and directed the concerned to review the changes in the natural gas prices.
He said the ECC was told to convene a meeting today on the matter to get its decisions ratified on the same day.
The minister said the cabinet also granted an exemption to the Pakistan LNG Limited from rule numbers (1)13 and 35 of the Public Procurement Rules 2004 for procuring liquefied natural gas (LNG) from spot market from January 2024 to June 2024.
On the Cabinet Division’s recommendations, the cabinet exempted the Sui Southern Gas Company Limited from rules 9, 13, 35, and 40 of the Public Procurement Rules 2004 for the procurement of 20,000 metric tons of spot LPG (Liquefied Petroleum Gas) cargo from November 2023 to March 2024. He said the cabinet also confirmed the decisions made during the Cabinet Committee on Legislative Cases’ meetings held on October 6 and October 27.
Solangi said the interim cabinet approved the Repatriation Order under sections 3 and 14B of the Foreigners Act of 1946 on the recommendations of the Ministry of Interior. It was aimed at sending back illegal immigrants to their countries.
He said the caretaker prime minister had issued special directives for ensuring repatriation of illegal immigrants in a dignified and respectful manner. Women and children would also be provided special care during the repatriation process.
The minister that directives had been issued that no state agency would exceed its authority at any stage of the process adding that the interim prime minister had directed to establish a special system for not only preparing the database of individuals being repatriated under the Repatriation Order, but also monitoring the entire process.
He said the cabinet also accorded approval for presenting a work plan before the cabinet regarding the matter so that it could be ensured that all illegal immigrants left the country in a phased-manner. He said the illegal immigrants could only return to Pakistan through legal means.
On the recommendations of the Ministry of Interior, he said, the cabinet approved police station status for 10 immigration checkposts of the Federal Investigation Agency (FIA) in accordance with the Passport Rules of 2021.
He said on the recommendation of the Aviation Ministry, the cabinet approved international flight operations for Fly Jinnah airlines. Following this approval, the airlines could now conduct flight operations to Afghanistan, Bangladesh, Iraq, Malaysia, Oman, Qatar, Saudi Arabia, Thailand, Turkey, and the United Arab Emirates.
Solangi said the cabinet, upon the recommendation of the Ministry of Maritime Affairs, approved signing of a cooperation protocol between Tajikistan’s Ministry of Industry and New Technologies and Pakistan’s Ministry of Maritime Affairs to enhance revenues and trade in the industrial goods and services sector.
On the recommendation of the Ministry of Commerce, the cabinet gave its consent for the removal of Pakistan Steel Mills Corporation from the privatization programme, and directed the Ministry of Industries and Production to propose a future course of action regarding the matter.
To a question, Solangi said the caretaker government was strictly adhered to its constitutional role of holding free, fair and transparent elections in the country. “We are not a political government, and we do not have any political agenda. Political parties do not need us for establishing contacts with each other.
He said the Election Commission is in contact with all the political parties. To a question regarding planned appointments against posts of executive directors of PIMS and Poly Clinic from the Army Medical Corps, Minister for Health Services Dr Nadeem Jan said that all recruitments would be made on merit and as per government rules.
