Caretaker Energy Minister Muhammad Ali on Tuesday said the reasons behind the cabinet’s approval of the steep hikes in fixed monthly charges and consumer rates for natural gas would help ease the fiscal deficit.
In a press conference, the Minister stated that for the past decade, Pakistan has been unable to meet the local demand for gas without the help of imports, which had resulted in a significant decrease in Pakistan’s foreign exchange reserves.
“Because of rising fiscal deficit, we were prone to more borrowing,” he stressed. “These loans are making us more vulnerable to inflation.” For the past decade, most of the international companies for natural gas exploration— except for four — have left Pakistan because of losses, he said, rendering Pakistan unable to meet its demands without imports.
“In January 2022 inflation was 13pc and in January 2023, it was 27pc.”
He emphasised the importance of curbing circular debt. “Circular debt has increased to Rs2,100 billion,” he added. “And if we did not stop it, it would have gone to Rs2,400 billion.”
The energy minister further broke down how the increment in gas price rates affected different sectors.
He assured that 57pc of the population will not bear the brunt of this hike, as a fixed charge has been put in place to ensure that their bills do not exceed Rs1,300. “The tariff will increase with consumption. The rich will pay more.” He highlighted this was a “progressive” hike which will not impact the vulnerable segment of society.
“The 57pc of the population — which falls under the protected category — will not bear the brunt of this hike,” he stated, they will still enjoy a subsidy of 66pc.
