In a move to address the escalating circular debt crisis, the government is considering a 10-15% hike in gas prices, aiming to reduce the existing debt of Rs1,250 billion, as per reports.
The decision comes following the International Monetary Fund’s (IMF) directive for Islamabad to raise natural gas prices starting January 1 next year. Acknowledging the government’s revenue collection of Rs980 billion in the ongoing fiscal year, attributed to a substantial 193% increase in gas prices, officials from the Energy Ministry disclosed plans to raise gas prices by 10-15%, generating an additional Rs100 billion for debt reduction.
While a final decision is pending, insiders suggest a more conservative 5% increase to yield Rs50 billion. The recent surge in gas prices, effective November 1, 2023, is expected to result in a surplus revenue of Rs275 billion. However, this windfall will be offset by the Rs210 billion cost incurred for diverting Regasified Liquefied Natural Gas (RLNG) to the domestic sector during the winter season, with an additional Rs65 billion loss due to a delayed gas price hike notification.
Meanwhile, gas companies, including Sui Southern and Sui Northern, are anticipated to submit petitions to the Oil and Gas Regulatory Authority (OGRA) seeking a revision of gas prices from January 1, 2023, likely advocating for a downward adjustment. However, the IMF is pressing for a 10-15% increase from January 1, 2024, emphasizing the government’s decade-long lapse in biannual gas tariff adjustments, contributing to the mounting circular debt.
