PTBP Web Desk
Federal Minister for Petroleum Musadik Malik announced adjustments in the proposed gas price increase for non-protected domestic categories. During a press conference on Monday, Malik detailed how the government has leveraged the profits of two major gas companies, Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL), to manage these adjustments.
Malik revealed that the federal government had decided to subsidize non-protected domestic gas consumers by redirecting Rs100 billion from the profits of SNGPL and SSGCL. “Out of this Rs100 billion, Rs98 billion has been allocated to prevent a price increase for non-protected domestic gas consumers, while the remaining Rs2 billion will be used to reduce circular debt,” he clarified. This strategic use of profits aims to cushion the impact of rising gas costs on a significant portion of the population, particularly those in the non-protected category, which, surprisingly, includes 64 percent of the poor.
The minister pointed out the historical context of gas pricing, noting, “The gas price has been increased from Rs1,050 per mmbtu to Rs1,770 per mmbtu since the first government of PDM.” Despite an overall 70 percent increase in gas prices during this period, the current administration has refrained from further hikes, showcasing a commitment to financial relief for domestic consumers amidst economic challenges.
Further elaborating on policy decisions, Malik mentioned the necessity to adjust tariffs for Captive Power Plants (CPPs) in line with commitments made by the previous PTI government to the International Monetary Fund (IMF). “We had no choice but to raise tariffs of Captive Power Plants to comply with one of the IMF’s conditions,” he stated. The IMF’s push for tariff hikes is part of a broader strategy to ensure economic reforms and financial stability, which sometimes clashes with domestic policy objectives.
Addressing concerns from the industrial sector regarding the tariff adjustments for CPPs, Malik hinted at a government plan to impose a levy but emphasized the intention to engage with the industry first. “We have a plan to impose a levy but will consult with the industry first,” he assured, indicating a collaborative approach to managing economic policies that affect businesses.
The minister also touched upon legislative changes made by the caretaker government, particularly amendments to gas laws. These changes mandate the inclusion of RLNG (Re-gasified Liquefied Natural Gas) price diversions into domestic consumer pricing during biannual adjustments. This move aims at aligning domestic gas prices more closely with international market rates, providing a buffer against volatility.
Malik announced the formation of a committee specifically tasked with reviewing gas prices for the fertilizer sector, an industry crucial for agricultural productivity. Additionally, he revealed plans for a meeting of the Council of Common Interests (CCI) to tackle the ongoing water dispute among provinces, indicating a holistic approach to resource management and pricing.
