Proposed Hike in Gas Tariff Will Affect 4.3 Million Consumers

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Gas loadshedding woes persist: Citizens grapple with 200% surge in bills

Karachi Oct 28,2023: President FPCCI, Irfan Iqbal Sheikh,  has forewarned the government that there will be huge repercussions of the looming gas tariff hikes on commercial and industrial consumers – and, the affected number of consumers may be as high as 4.3 million.

Sanity should prevail as Pakistan is already railing under historic inflationary pressures, he added.

It is pertinent to note that Economic Coordination Committee (ECC) has already approved the raise and cabinet ratification is awaited; and, in all probability, the government is going to implement the new tariffs with effect from 1st November 2023. It is bad economics and the proposed hike must be rationalized like it happens everywhere in the world for the export-oriented industries, he added.

FPCCI Chief pointed out that gas tariff for export-oriented industries has been increased by 86 percent to PKR. 2,050 per MMBtu and, for general industries, it has been raised by 117 percent to PKR. 2,600 per MMBtu. Industries would not be able to absorb this massive, one-go and ill-thought-out hike.

Mr. Irfan Iqbal Sheikh has called for an immediate intervention of the apex committee of Special Investment Facilitation Council (SIFC) to halt its ratification from the federal cabinet and subsequent implementation. SIFC is striving for bringing FDI to Pakistan and the government in Pakistan has no understanding and grasp of the criticality of keeping the cost of doing business; ease of doing business and cost of keep production inputs stable & competitive.

Mr. Irfan Iqbal Sheikh has proposed that the government should reduce the circular debt of the gas sector through plugging the wastages like line losses; eliminating cross subsidies; conducting scientific surveys to assess the unaccounted for gas (UFG); recovery of dues from governmental, semi-governmental & private-sector defaulters and gas pilferages through professional management of the distribution networks.

Mr. Irfan Iqbal Sheikh also invited the federal caretaker minister for energy, power and petroleum to the apex body for a consultative process to find out alternative avenues to meet IMF conditionalites vis-à-vis energy & power sectors; reducing circular debt and increasing revenues of the state-owned gas companies.

Mr. Muhammad Suleman Chawla, SVP FPCCI, explained that cumulatively the price of gas for the export-oriented industries will be around PKR, 2,300 per MMBtu as another 10 percent is being added to its price in the form of blended cost of re-gasified liquefied natural gas (RLNG). He added that gas tariff hikes for commercial consumers will further fuel the inflation for the ordinary citizens as well. The government needs to rethink the hike and protect the vulnerable before implementation.