ECC to take up 15 percent gas tariff hike

The Economic Coor dination Committee (ECC) is expected to take up approval of up to 15 per cent increase in gas tariff on Wednesday to fulfil its commitments to the International Monetary Fund. The meeting, to be presided over by PM’s Finance Adviser Abdul Hafeez Shaikh will also consider the establishment of a trust fund to implement risk sharing facility under a $10 million World Bank loan and order the State Bank of Pakistan (SBP) to sells its shares in the House Building Finance Company (HBFC).

A summary moved by the Petroleum Division to the ECC proposed 5-15pc increase in gas tariff for different consumer categories. The ECC had considered the summary on Jan 20 but put the matter on hold owing to the then prevailing controversy over wheat and sugar price hike. The division in its summary said that under the Oil and Gas

Regulatory Authority (Ogra) law, federal government is required to “advise category-wise gas sale prices to Ogra for notification in the official gazette within forty days i.e. Jan 20, 2020”.

It said the division has changed Ogra’s recommendations by reducing the proposed price increases for the poor and lower middle class. The summary, however, proposed about 400pc increase in meter rent for domestic consumers from Rs20 per month to Rs80. The division said the meter rent was last fixed in 1997.

The summary proposed a 5pc increase in gas tariff for domestic consumers with lower consumption, 12pc increase for power sector plants and 15pc increase for industrial captive power plants and compressed natural gas stations (CNG). The division said Ogra had determined revenue requirement of Rs274.2 billion for Sui Northern Gas Pipelines Limited (SNGPL) and Rs282.9bn for Sui Southern Gas Company Limited (SSGC) on Dec 11, 2019.

At existing gas prices, the two companies faced a cumulative loss of about Rs35bn. The division said that Ogra’s recommendations had been examined and revisions were made in various categories and heads to protect the revenue requirement determined by the regulator.

Besides the above increases, the division envisaged in its summary that the gas tariff to all zero-rated general industry and their captive power plants at $6.5/mmBtu (Rs1,000/mmBtu) regardless of the location both SNGPL and SSGC. For captive power plants other than zero-rated industry and CNG, a tariff increase of 15pc was proposed.

In a significant move, the division also recommended the fertiliser plants be provided fuel at Regasified Liquefied Natural Gas Price – Rs1,672/mmBtu being current price of LNG. Also, the minimum billing volume for domestic and special commercial consumers (tandoors) would be revised from 40cm per month to 50cm per month for which the bill against gas charges will be Rs220 per month.