Pakistan to revise gas tariff for fertilizer sector on IMF’s demand

In October, Pakistan is poised to make adjustments to its gas tariff for the fertilizer sector, as per the demands of the International Monetary Fund (IMF).

This decision has been made by the caretaker government, as the IMF refused to provide subsidized gas to the fertilizer sector. The timing of this adjustment aligns with the commencement of a review with the IMF under a $3 billion Structural Adjustment Program (SAP) loan.

Under the revised pricing model, gas tariffs for feedstock purposes in the fertilizer sector are expected to rise to approximately Rs580 per MMBtu. This means that the gas cost for fertilizer production will increase by Rs278 per MMBTu, resulting in a new gas rate of Rs1,580 MMBTu.

This move to revise gas prices across various sectors, including fertilizer production, is part of a broader strategy aimed at addressing Pakistan's significant circular debt in the energy sector. It's worth noting that discussions for the second tranche of the IMF bailout are likely to take place in the last week of October.