Govt gives go-ahead to hike industry gas rate to meet IMF demands

The federal government has given a nod to increase gas rates for industrial captive power units by nine percent in order to meet the demands of the International Monetary Fund (IMF).

The notification issued on Sunday stated that the new rates would be effective from July 1 (today). 

The decision was taken in a meeting of the Economic Coordination Committee (ECC) chaired by Finance Minister Muhammad Aurangzeb, which discussed the strategy to comply with the conditions of the glocal lender. 

In the meeting, the petroleum division attributed the captive tariff hike with prior action to meet the conditions of the IMF, which were discussed in the last meetings in Islamabad and virtual. 

However, the ECC also decided to separate power plants from the gas grid until January 2025.

The Oil and Gas Regulatory Authority (Ogra) had hiked the Rs180 per unit gas tariff for FY2024-25. But, later it sought government assistance to deal with circular debt of Rs132 billion.

In a recent effort to eliminate the circular debt, the ECC has approved an increase of Rs250 or 9.1 percent per unit, leading gas tariff to Rs3,000 per Million British Thermal Units (MMBTU), which was Rs2,750, previously. 

However, the gas tariff for non-commercial consumers will remain unchanged until December 31.

Despite the price being unchanged for the domestic consumer, the authority would collect Rs133 billion surplus, including Rs75 billion of SSGC, and Rs58 billion of SPGPL.