IMF orders 100% increase in gas tariff for protected customers

Islamabad: The International Monetary Fund (IMF) ordered a 100% increase in the gas tariff of protected customers and the government has also decided to eliminate the disparity in the gas tariff of the export and non-export sectors.

According to the details, authorities are working on the option of increasing gas prices for 57 percent of protected residential customers across the country from January 2024 as the gas system is still facing a loss of Rs100 billion due to protected gas customers.

In the latest gas tariff notification effective from November 1, 2023, the protected gas consumers did not face any tariff hike except the increase in meter charges from Rs10 to Rs400 per month.

From January 2024, the authorities want to increase the gas prices of protected customers by 100%, which are currently at the lowest level compared to other categories of domestic consumers for a revenue of Rs50 billion. This will reduce the loss of 100 billion rupees of protected customers by 50%.

A further hike for protected customers will be implemented from July 1, 2024 to offset the remaining Rs50 billion loss. Apart from this, the government is also going to eliminate the disparity between export and non-export industry in terms of gas prices from January 2024 under the orders of the IMF, which will generate an additional revenue of Rs20 to Rs30 billion.

The IMF also wants the government to end cross-subsidies of Rs27 billion on fertilizer joints (Engro Fertilizer in the Sui Northern system and Fauji Fertilizer Bin Qasim Limited in the Sui Southern system).

Senior officials of the Ministry of Energy stated that under the guidelines of IMF, the government will treat the export and non-export sectors as one industrial sector and their tariffs will be made uniform.

Captive power plants that are connected to the natural power grid will not be supplied with gas, but those that are not connected to the national grid will now be supplied with Re-gassified Liquefied Natural Gas (RLNG) instead of local gas.

The government is working to increase the gas tariff for the export sector by Rs100 per MMBtu to bring their tariffs for export and captive plants at par with the tariffs of the non-export industry.