Staff Report
ISLAMABAD: Gas consumers should get ready to bear a heavy jolt as the federal cabinet’s economic coordination committee (ECC) on Monday approved massive hike in the gas prices for various categories of gas consumers with effect from 1st November, 2023.
A meeting of the ECC was held on Monday evening under the chair the Federal Minister for Finance, Revenue, and Economic Affairs, Dr. Shamshad Akhtar to consider various agenda points and summaries submitted by the Ministries of Industries and Production, Ministry of Energy (Petroleum Division), Ministry of National Food Security and Research, Earthquake Reconstruction and Rehabilitation Authority (ERRA), and the Ministry of Finance.
During the course of ECC meeting, a summary submitted by the Ministry of Energy (Petroleum Division) regarding the revision of the natural gas sale pricing for the FY 2023-24, was also considered by the forum. The ECC, after detailed discussion and deliberation, approved the summary as per the tariff schedule submitted by the Ministry, prospectively w.e.f. 1st November, 2023, instead of 1st October, 2023.
As per details, the ECC considered the Petroleum Division’s proposal, titled ‘Natural Gas Sale Pricing for FY 2023-24 which outlined revised gas prices for various consumer categories.
After the ECC’s approval, non-protected domestic consumers will experience a substantial hike, ranging from Rs 300 to Rs 4,400 per Million British Thermal Unit (MMBTU), depending on their usage. Additionally, fixed monthly charges for both protected and non-protected domestic consumers will see substantial increases, marking a significant change in the cost dynamics for households across the country.
Under the approved gas prices for different categories of the gas consumers, gas tariff for protected domestic (residential) consumers will remain the same while the gas price for non-protected domestic consumers who use up to 0.25hm3 (cubic hectometer) has been revised from Rs 200 per Million British Thermal Unit (MMBTU) to Rs 300/mmbtu. Similarly, the gas price for non-protected domestic consumers who use up to 0.6 hm3 has been approved increase from Rs 300/mmbtu to Rs 600/mmbtu, while gas price for non-protected domestic consumers who use up to 1hm3 is approved to go up from Rs 400/mmbtu to Rs 1,000/mmbtu and the gas price for non-protected domestic consumers who use up to 1.5hm3 has been approved to witness hike from Rs 600/mmbtu to Rs 1,200/mmbtu. Likewise, gas price for non-protected domestic consumers who use up to 2hm3 has been increased from Rs 800/mmbtu to Rs 1,600/mmbtu and the gas price for non-protected domestic consumers who use up to 3 hm3 has been approved to increase from Rs 1,100/mmbtu to Rs 3,000/mmbtu while the gas price for non-protected domestic consumers who use up to 4 hm3 has gone up from Rs 2,000/mmbtu to Rs 3,500/mmbtu. Furthermore, the gas price for non-protected domestic consumers who use above 4hm3 has been jacked up from Rs 3,100/mmbtu to Rs 4,000/mmbtu with effect from 1st November, 2023.
It is also learnt that fixed monthly charges for protected category of domestic (Residential) consumers will go up from Rs 10 to Rs 400 while fixed monthly charges for non-protected domestic consumers who use up to 1.5 hm3 is approved to increase from Rs 460 to Rs 1,000 and the fixed monthly charges for non-protected domestic consumers category who use 2 hm3 of gas to above 4hm3 is approved to increase from Rs 460 to Rs 2,000 with effect from 1st November, 2023.
As per approved revision in the gas tariff for other categories of gas consumers, the gas price for bulk consumers is approved to be raised from Rs 1,600/mmbtu to Rs 2,000/mmbtu, while the gas price for special commercial (Roti Tandoor) will remain the same at Rs 697/mmbtu and gas price for commercial consumers is approved to go up from Rs 1,650/mmbtu to Rs 3,900/mmbtu. Similarly, gas tariff for Liberty Power is approved to increase from existing Rs 2,406/mmbtu to Rs 3,890/mmbtu while the gas price for Liberty Power is based on HSFO linked formula and not fixed by the government. Likewise, gas price for fertilizer plant of FFBQL (feed) is approved to be increased from existing Rs 510/mmbtu to Rs 580/mmbtu while no change in gas price for Engro (feed) is approved as Engro Fertilizer Ltd (new plant) has a claim of extended period for feed gas concessionary tariff of US$ 0.7/mmbtu due to non-supply of gas by SNGPL and Sindh High Court has granted stay order to maintain the status quo. However, gas price for fertilizer (fuel) is approved to be increased from existing Rs 1,500/mmbtu to Rs 1,580/mmbtu. Furthermore, gas price for cement category of gas consumers is approved to witness hike from existing Rs 1,500/mmbtu to Rs 4,400/mmbtu.
As per details, the gas price for export industry (process & captive) is approved to be revised from existing Rs 1100/mmbtu to Rs 2,050/mmbtu and the gas price for non-export industry (process & captive) is approved to be increased from existing Rs 1,200/mmbtu to Rs 2,600/mmbtu. Also, the gas price for the category of CNG is approved to be revised rom Rs 1,805/mmbtu to Rs 4,400/mmbtu.
During the ECC meeting, the Ministry of Industries and Production submitted a summary regarding the measures to meet the requirements of urea for Rabi season 2023-24. The ECC discussed the proposal in detail and approved immediate import of 200,000 MT of Urea fertilizers. The meeting also directed that uninterrupted supply of gas for the fertilizer industry to be ensured. It was also decided that the provinces will be asked to act more proactively to bear the importation cost.
The ECC also discussed and approved the summary submitted by the Ministry of National Food Security and Research regarding the cost efficient import of 1.00 MMT of milling wheat for the year 2023-24, through TCP under through open tendering process, to maintain the strategic reserves. The ECC also approved the proposal for encouraging the private sector to import specified milling wheat under Ministry of Finance Notification of 14th November 2008, while meeting the criteria envisaged in the import policy order 2022. The ECC also directed the Ministry to conduct a third party verification of the wheat stock in the country.
The meeting also deliberated over a summary submitted by the Earthquake Reconstruction and Rehabilitation Authority (ERRA) for approval of the Technical supplementary Grant of Rs. 484 Million to meet critical expenditure on pay and allowances of 415 contract and project employees from July 2023 onwards. The ECC directed the Ministry of Planning, Development and Special Initiatives to identify the savings to finance the salaries of the ERRA employees.
A summary of Ministry of Finance regarding the establishment of the National Credit Guarantee Company Limited to support the credit enhancement of the Small and Medium Enterprises (SMEs) was also considered and approved by the forum.
The meeting was attended by the Minister for Commerce, Industries, & Production, Gohar Ijaz, Minister for Communications, Railways, & Maritime Affairs, Shahid Ashraf Tarar, Minister of Planning, Development and Special Initiatives Sami Saeed, Minister for Power & Petroleum, Muhammad Ali, Minister for IT & Telecom, Dr. Umar Saif, Advisor to PM on Finance, Dr. Waqar Masood, Deputy Chairman Planning Commission, Muhammad Jahanzaib Khan, Chairman SECP, Federal Secretaries, and other senior government officials of the relevant ministries.
