On Thursday, the Economic Coordination Committee (ECC) of the Cabinet approved an up to 335 percent increase in consumer-end gas prices, with effect from July 1. This will generate about Rs666 billion in revenue for two gas utilities during the current fiscal year.
The proposed increase in gas prices would allow for an additional Rs120bn in surplus revenue for the two gas utilities, Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL), on top of the Rs546bn already determined by the Oil and Gas Regulatory Authority (Ogra).
This is in response to a request from the petroleum division to make up for partial losses from the previous fiscal year. The revised rates will be notified after ratification by the federal cabinet, and must be legally in place by July 13.
The committee has decided to cancel the tenders for 500,000 tonnes of wheat import that were approved two days ago. This is due to the continuous decline in global wheat prices. TCP has been asked to float fresh tenders for 300,000 tonnes of wheat import instead.
According to the ECC’s decision, gas rates for export and non-export sectors would now be reduced by Rs100 per unit — or million British thermal units (mmBtu) — to Rs1,350 and Rs1,550 per mmBtu, respectively, instead of Rs1,450 and Rs1,650 recommended by the petroleum division. These rates would still be 58pc higher than existing rates of Rs852 and Rs1,087 per unit, respectively.
Under the new decision, gas rates for the lowest residential slab of up to 50 cubic metres would be charged at Rs171 per mmBtu, an increase of 43 percent over the existing rate of Rs121 per unit.
The monthly bills of these consumers would go up by 36 percent. The next slab of 100 cubic metres would remain unchanged at Rs300 per unit. The third slab (200 cubic metres) and fourth slab (300 cubic metres) would jump 26 percent and 151 percent to Rs696 and Rs1,856 per unit.
The last remaining slabs have been consolidated into one for all consumers with monthly consumption of 400 cubic metres or less. They will be charged the same rate of Rs3,712 per unit – almost the cost of LNG.
This is a 335% increase from the current rate of Rs1,107 per unit, and their bills will jump by 346%.
The rate for above 400 cubic meters was currently charged at Rs1,460 per unit, which would now face a 154pc increase to Rs3,712 per unit.