Proposed increase in gas tariff not to affect 57pc consumers: Energy Minister

ISLAMABAD: Minister for Energy Muhammad Ali on Thursday said the proposed increase in gas tariff would not affect 57 percent of consumers across the country, rather it would help control and end the ever-increasing circular debt of the petroleum sector.

“It will be a big achievement,” the minister said in a media briefing on the gas prices’ revision. Minister for Information and Broadcasting Murtaza Solangi was also present.

The energy minister said the increase in gas prices had been approved by the Economic Coordination Committee (ECC) and now would be presented before the federal cabinet for the final nod, the official news agency reported.

Out of around 10 million gas consumers, he said, the commodity price for 5.7 million had not been increased. “After the proposed increase, there will be no surge in the circular debt of the energy sector, which currently stood at Rs2.1 trillion in the recent past.”

The minister said the fixed rate (line rent) for the 5.7 million gas consumers had been increased from Rs10 to Rs400, adding that the new tariff would marginally affect the protected gas consumers.

He was of the view that most of the people living in rural areas had no access to gas and were using Liquefied Petroleum Gas (LPG) and wood as sources of fuel.

“Approximately 30 percent of the country’s population has access to gas facility while this commodity is not available to 70 percent of the population and they are using LPG and wood as fuel,” he said.

Ali further explained that in terms of consumption, 57 percent of households primarily use 31 percent of the total gas and account for 11 percent of payments.

He said that the upper class, which constituted 3 percent of gas consumers, used 17 percent of the gas, leading to a 39 percent billing rate. He said the gas rate had not been increased for ‘tandoor’ across the country to facilitate the masses.

The minister said gas prices for the Compressed Natural Gas (CNG) and commercial connections had also been increased. However, he said gas price for the fertilizer and power sectors had not been increased as the hike in the price for this sector directly affected the farmers.

He said the gas price for export-oriented industries had been brought to the level of regional countries, adding that a uniformed gas tariff had been put in place for the old and new industrial gas connections.

“The gas tariff difference between the north and south regions for industrial sector has also been narrowed,” he added.

However, he said, that the gas rate had been increased for non-export industries.

Responding to a question, he said there was no plan to lift ban on new gas connections due to non-availability of gas.

“Sooner or later we will have to shift on LPG due to non-availability of the natural gas in the country [as existing reserves are depleting at the rate of around 9 percent annually],” he added.

He said around the world natural gas was being provided to power sector for the generation of cheaper electricity.

To another question, the minister said following the increase in gas tariff, there were bright chances of international companies to invest in oil and gas exploration activities in Pakistan.

Muhammad Ali further said it was unfortunate from the last many years as no exploration policy framework had been made. “We are working on an exploration policy framework,” he added.

Responding to a question with regard to controlling LPG price, the minister said the government was working with Oil and Gas Regulatory Authority (OGRA) on this issue.

To a query about gas supply situation during the peak winter season (November-February), he said gas supply to domestic consumers would be available for eight hours like the previous year.

The energy minister said due to circular debt and revolving loans, the payments were not being made to many companies which made them windup their business from Pakistan.

He brushed aside the impression that the new gas tariff would primarily benefit the wealthy segments of the society, emphasising the broader impact on various sectors.