More gas tariffs hikes planned as Pakistan eyes another IMF programme
Business
Proposal to affect domestic consumers as well as fertilizer, cement and CNG sectors
- Tandoors to be exempted from price increase
- Move comes as the two sides are discussing ways and means to reduce gas circular debt
ISLAMABAD (Dunya News/Web Desk) – As the International Monetary Fund (IMF) and Pakistan are currently involved in policy-level talks on the next loan programme, the authorities have proposed another round of gas tariff hike for different set of consumers, sources say.
With the aim of controlling the gas circular debt in mind, Pakistan have shared three plans with the Washington-based lender, the sources said, as the IMF – one of the Bretton Woods Institutions established in 1944 – isn’t backing down on its primary demand of reducing budget deficit.
The latest increase in gas tariffs will be applicable from August this year and affect not only domestic consumers but also fertilizer, cement and CNG sectors.
According to the sources, it is proposed that gas tariffs for both protected and non-protected domestic consumers should be increased by Rs100 to Rs400, depending upon their consumption.
Read more: Pakistan sees 2024-25 inflation at 11.8pc, IMF thinks it will be 12.7pc
However, the government wants to keep the gas tariffs for tandoors unchanged as these serve the working class and other low-income groups.
Earlier, the PML-N government in Punjab reduced the roti prices, forcing the tandoor owners to sell 100 gram roti for Rs15 and fixed the naan [120 grams] price at Rs20 – a move which has been later replicated in other parts of the country too.
The three plans submitted by Pakistan are part of the overall talks revolving around the gas sector circular debt as well as the intended reforms.
Energy reforms for both gas and power sectors have not only been a main IMF demand but also suggested by the World Bank and other international financial institutions (IFIs).
That’s why the two sides also held discussions on a dividend scheme to reduce the circular debt which is affecting the working of Sui Northern and Sui Southern – the two marketing companies responsible for gas marketing in the country.
Moreover, the sources also said that the two sides had agreed on data sharing with the IMF concerning arrears recovery, tariffs and tariffs at the latest.
Earlier, it was reported in media that the fertilizer companies did not pass on the benefits to the farmers after receiving billions in subsidies, as the IMF has been advocating for targeted subsidies so that the low-income groups are the beneficiates instead of big businesses.
It worth noting that the urea prices have been raised continuously in Pakistan, which adversely impacted the farmers by increasing the cost of production.
