Gas Tariff Hike

The impending increase in gas tariffs, set to surge by more than 50%, is a bitter pill for the already burdened Pakistani populace to swallow. This decision, influenced by the Inter­national Monetary Fund (IMF), is a direct blow to the wallets of or­dinary citizens. It comes on the heels of a ray of hope offered by a slight reduction in electricity bills, but the gas tariff hike throws us back into the abyss of financial uncertainty. 

The alarming statistics surrounding the gas sector are indeed concerning. An annual loss of Rs. 350 billion and a staggering total circular debt of Rs. 2.70 trillion paint a grim picture. While it is evi­dent that the sector requires attention and reform, passing on such a hefty financial burden to the end consumer is not the solution. 

The approval by the Oil and Gas Regulatory Authority (Ogra) for gas price increases, with Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) both set to wit­ness hikes of Rs. 415 and Rs. 417 per mmbtu, respectively, is a stark reminder of the dire straits we find ourselves in. This in­crease, effective July 1, 2023, will hit the common man’s pocket hard, making the use of gas unaffordable for many. 

Exploring alternatives, such as the import of cheaper gas, should be a priority. However, our options seem limited, leav­ing us with no choice but to bear the brunt of this increase. The IMF agreement also mandates the implementation of a weight­ed average cost to recover imported gas prices from consumers. This complex formula aims to calculate gas prices by factoring in both imported LNG and local rates, inevitably leading to high­er costs for consumers. 

It is important to note that while the IMF has granted temporary relief for electricity bills, it is a selective measure benefiting only a fraction of consumers. The government’s request for relief for consumers using up to 400 monthly units was declined, leaving millions unaffected by this supposed “assistance.” 

The burden of unpaid bills and electricity theft cannot be de­nied, but it is equally essential to ensure that such efforts do not disproportionately affect the common people. Interim Energy Minister Mohammad Ali’s concerns about losses due to theft and unpaid bills, amounting to Rs. 589 billion annually, are valid. How­ever, there must be a balance between curbing these issues and ensuring that essential services remain affordable.

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