Islamabad: The Economic Coordination Committee (ECC) of the Cabinet on Thursday approved an increase of up to 335pc in the prices of gas for domestic, commercial and other categories of consumers.
The ECC, chaired by Finance Minister Miftah Ismail, approved the summary sent by the Petroleum Division on the natural gas sale pricing for the fiscal year 2022-23. The summary would go into effect from July 1 to generate about Rs666 billion in revenue for two gas utilities – SNGPL and SSGCL – during the current fiscal year.
The ministry argued that since the fiscal year 2015–16, the gas prices had not been adjusted per the OGRA’s determined revenue requirements. As a result, as of March 2022, there was a buildup of revenue shortfall and tariff disparity totalling Rs546 billion.
Similar to this, the circular debt for the gas industry climbed from Rs 299 billion in June 2018 to Rs 1,232 billion on March 31, 2022. The Petroleum Division devised broad guidelines/parameters for the modification of the category-wise consumer gas sale prices to address revenue losses, control circular debt in the gas sector, maintain the supply chain, and invest in exploration and production.
The proposed change to consumer gas sale prices was accepted by the ECC, with the instruction to further lower gas prices for export and non-export industry/captive power.
With the increase, the SNGPL and SSGCL would be able to receive an additional Rs120 billion in surplus revenue on top of the Rs546 billion set by the OGRA.
After the federal cabinet approves them shortly after Eid ul Adha, the updated prices will be announced because, by law, they must be in effect by July 13th.