ACCORDING to media reports, Petroleum Division has started work on a major restructuring of Pakistan’s gas tariff system, aimed at abolishing the existing 12-slab consumer categories and introducing a single gas tariff, while shifting the basis of subsidies for vulnerable or protected consumers from gas consumption to household income. Under the proposed arrangement, protected consumers would no longer receive cheaper gas merely because they fall within a particular consumption slab. Instead, eligible low-income households would be provided with targeted financial assistance based on their income.
The slab system is a sheer exploitation tool to mint money and serves as a disincentive to use more gas or electricity even if there are no supply constraints. It is because of the slab system that gas companies and discos are unable to sell gas and electricity during surplus periods and consumers are forced to explore other options including installation of more than one meter at their premises as well as rooftop solar panels. In this backdrop, the proposal to go for a single slab has the potential to end the unjust and exploitative system and benefit both the companies and the consumers, provided a fair pricing mechanism is adopted. As per reports, a single average gas tariff of Rs1,708 per mmbtu would apply across the board — not only to high-end domestic consumers but also to CNG stations, cement manufacturers and commercial and industrial users. The move could provide significant relief to industrial, cement and commercial consumers, whose gas input costs would fall substantially under the proposed regime. At present, high-end domestic and CNG consumers are among the categories contributing to the roughly Rs160 billion cross-subsidy used to keep gas tariffs lower for protected and some non-protected consumers. This could mean some additional burden for domestic consumers but in the long run the proposal offers a solution to woes of the gas sector (which is also facing huge circular debt) and different categories of consumers. Based on actual implementation, the common man would also benefit if industrial and commercial consumers lower rates of their products proportionately. While appreciating the move of Petroleum Division, we would urge the Power Division to follow suit and introduce a single slab, which would go a long way in minimising grievances of consumers and increase profitability of power companies.
