IMF demands Pakistan to increase gas prices twice a year

The International Monetary Fund (IMF) has asked Pakistan to hike the gas tariff twice in a year to avoid further increases in circular debt, sources said on Saturday.

In addition, the global loan lender dictated the government to separate itself from the process of gas tariff implementation by empowering the Oil and Gas Regulatory Authority (OGRA).

According to the sources, a proposed recommendation will be helpful for the sector to avoid circular debt that increased to Rs29,000 billion in FY2023-24.

It added that the IMF reiterated its demand to equalise the gas tariff for the Captive Power Plants (CPP) with the RLNG running power plants till January 1, 2025.

The sources in government added that IMF's demand to empower the Ogra was also considered during the caretaker’s tenure when the Economic Coordination Committee (ECC) had approved the suggestion of authorising Orga to notify the gas sales prices as per the determined tariff.

It said the ECC decided the government would not interfere, but it would decide to provide subsidies to the consumers falling in a specific category within 40 days. 

The Fund advised the government to adjust the tariff twice in the year, first on July 1 and second on January 1, so that the circular debt in the gas sector could be adjusted. 

The gas tariff was increased twice in the ongoing fiscal year. Firstly it was hiked by 193 percent in November 2023, while the country witnessed a second time increase in February 2024 by 66.67 percent.