Committee set up to finalise proposals on gas price hike

The Economic Coordination Committee (ECC) of the Cabinet on Tuesday constituted a committee to finalise recommendations on gas price increase that would generate Rs34 billion in additional revenue for gas companies, but without jacking up fertiliser price.

The committee will comprise Prime Minister’s Adviser on Institutional Reforms and Austerity Dr Ishrat Husain, Minister for Economic Affairs Hammad Azhar, Minister for Food Security Khusro Bakhtyar, Adviser to the PM on Commerce and Industries Abdul Razzak Dawood, Energy Minister Omar Ayub Khan, Special Assistant to the PM on Petroleum Nadeem Babar and top officials of relevant ministries.

The committee will submit its report to the ECC meeting expected next Monday. Adviser to the Prime Minister on Finance and Revenue Dr Abdul

Hafeez Shaikh chaired the ECC meeting.

Sources said the meeting took up the petroleum division’s summary for gas price increase, but Dr Shaikh noted that it required more clarity because of the complex issues involved, particularly those expected to affect the vast majority of the population, rather than just the gas consumers. Therefore, he sought further deliberations to reach a better informed decision.

For one, the finance adviser desired that key stakeholders, particularly the fertiliser manufacturers, should be called again for a binding agreement that they would not jack up fertiliser prices since the recent cut in urea price by up to Rs160 per 50kg bag had been worked out on the basis of proposed gas price increase and reduction in gas infrastructure development cess (GIDC).

It was felt that the government had taken a sizeable revenue hit by reducing the GIDC to support the agriculture sector but it would go to waste if fertiliser prices go up again with gas price hike.

Likewise, CNG owners should also be taken on board that they do not unfairly increase gas prices.

On a suggestion that gas tariff increase be delayed for a few weeks to let the impact of higher billing due to winter consumption subside, PM’s special assistant Babar advised that the choice was between increasing the gas rates now or about Rs35bn subsidy being picked up by the government.