The Petroleum Ministry has put together a plan for up to a 60 percent increase in gas prices to curb the sector’s revolving debt on the direction of the International Monetary Fund (IMF).
Following the federal cabinet’s green light on the proposal and after relevant engagement with the provincial authorities, the new rates will be notified and implemented accordingly, local media reported earlier today.
A new gas rate will be set for the entire country based on the weighted average cost of gas. Regardless of where an individual lives, all consumers will pay the same.
The current price of domestic petrol is $8 per MMBtu, while imported LNG is $13 per MMBtu. The Petroleum Ministry intends to close the $5 difference between these two grades through the swift implementation of its latest proposal to hike gas prices for every consumer. This will help to lower the gas sector’s revolving debt.
The new plan is expected to address LNG consumption for manufacturing of fertilizers. Currently, producers get LNG at discounted rates, which has so far continued to widen the revolving debt. After the implementation of the new plan, manufacturers would be required to pay the full market price for LNG.
The coming few months will most likely see the Petroleum Ministry’s new plan in action. Consequently, it will have a big impact on consumers across the board.
This development comes after analyst expectations that the IMF would raise questions over the federal government’s decision to delay notifying the increase in gas tariff determined by the Oil and Gas Regulatory Authority back in June.
Despite public outcry for relief on energy bills, the government has no better choice but to raise the gas rate by over 50 percent. The aforesaid plan could offer an urgent cover to the caretaker setup as it struggles to manage the economy, with the revolving debt of the country being at the forefront of its priorities.
Source: ProPakistani