Gas prices increased by 31 per cent

[Naveed Yaseen]

By Aftab Maken
ISLAMABAD: The government on Monday announced an overall increase of 31 per cent in gas prices while the consumers using up to 200 cubic meters, comprising 91 per cent, would be exempted from this price hike.

Similarly the CNG prices would be increased from Rs 291.36 per mbtu to 388.32 per mbtu. When translating per kg, it would amount to Rs 13 per kg, This was announced by Minister for Petroleum and Natural Resources Shah Mahmood Qureshi at a press conference here on Monday.

Currently the CNG price is Rs 38.33 per kg and now it would be approximate Rs 52 per kg. Before increase in gas prices, the CNG prices when compared with petrol prices were 58 per cent cheaper, but now the CNG prices would be 49 per cent cheaper than petrol, claimed the minister.

Justifying the hike in gas prices, Shah Mehmood Qureshi said that the government after through consideration of the domestic and international scenario took this decision reluctantly. Out of seven slabs both for domestic and commercial gas consumers, the details of which would be notified by Ogra later, the first three slabs would also get a subsidy of Rs 35 billion against the existing subsidy of Rs 14.3 billion, said the minister.

Giving the break-up of the Rs 35 billion subsidy, Shah Mehmood said that the domestic consumers of first three slabs would be given a subsidy of Rs 23.9 billion while the fertiliser sector under the head of feedstock would get Rs 11.3 billion.

Replying to a volley of questions, Shah Mehmood Qureshi said both the gas utilities are receiving major portion (over 88%) of revenue requirement based on cost of gas, transmission and distribution expenses and return on assets.

Both the utilities i.e. Sui Norhten Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGC) would get Rs 62 billion through this gas price hike, said the minister. However, the minister made it clear that the government would revise the gas as well as oil pricing formulae for the companies within a month, as the companies were fleecing the masses.

When asked about Saudi Oil Facility (SOF), the minister said, “We are hopeful about the revival of the facility, however, other options for the facility would also be explored or offered”.

To another question, the minister said that the government was aware that the recent increase in the POL and gas prices would not add its popularity but it had no other option except increasing the prices.

No increase in gas pricing for Independent Power Producers (IPPs) was allowed because it would increase the cost of power production/electricity bills, says a press brief delivered after the press conference.

It has been decided to increase the gas prices for captive power purpose by 68 per cent to bring it at par with the purchases of electricity from Wapda. However, the gas based generators would still be producing electricity at a cost which would be only 39 per cent of the alternate fuel, the statement added.

To provide relief to small Tandoors at affordable prices, it has been decided to split the said consumers into two categories. First special commercial category of Tandoors with consumption up to 300 cubic meter per month will be billed under domestic tariff regime while the Tandoors exceeding 300 cubic meter per month consumption will be billed in accordance with other commercial consumers, the statement said. About 48 per cent of consumers under this category will avail the benefit of domestic tariff, which would reduce their monthly bill from Rs 4314 per month to Rs 2112 per month for consumption up to the extent of 300 cubic meters, it added.

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