Gas prices may further go up in coming days

Islamabad:  The federal caretaker government is considering a potential increase in gas prices ranging from 10% to 15% to tackle the circular debt, currently at Rs1,250 billion, the latest reports say.

 Despite the government's collection of Rs980 billion in revenue in the ongoing FY24 due to a substantial gas price hike of up to 193%, discussions are ongoing about an additional increase.

The move follows the International Monetary Fund's (IMF) recommendation for Islamabad to raise natural gas prices starting January 1 next year.

The officials from the Energy Ministry revealed that the authorities are contemplating a 10-15% increase in the natural gas sale price, aiming to generate an additional Rs100 billion in revenue to reduce the circular debt. However, a final decision on this matter is pending. It is suggested that gas prices may only increase by 5%, contributing Rs50 billion to this effort.

With the significant gas price hike implemented from November 1, 2023, the government anticipates surplus revenue of Rs275 billion. This surplus will be used to cover the Rs210 billion cost incurred due to RLNG diversion to the domestic sector in the ongoing winter season. It will also offset the Rs65 billion loss resulting from the government's delayed notification of the gas price hike by four months.

Sui Southern and Sui Northern, the gas companies, are expected to submit petitions to OGRA, seeking an adjustment in gas prices from January 1, 2023. This request may likely entail a downward revision of gas prices.

Despite this, the IMF insists on a further 10-15% increase in gas prices from January 1, 2024. The Fund emphasizes that the government's failure to biannually adjust the gas tariff over the past decade has led to a substantial accumulation of the gas circular debt since 2013.