Rs384bn gas subsidy to be given to protect common man’s interests: minister

ISLAMABAD: Minister for Energy Muhammad Ali on Tuesday said that the government would provide around Rs384 billion subsidy to gas consumers of different sectors including domestic, tandoor, and fertilizer aimed at lessening the inflationary impact on the common man.

Addressing a news conference on the gas prices’ revision along with Minister for Information and Broadcasting Murtaza, he elaborated that Rs139 billion gas subsidy would be given to domestic consumers, Rs45 billion to the fertilizer sector, and Rs200 billion to roti tandoors, the official news agency reported.

“The government has completely unchanged the sale price for gas supplies to roti tandoors because “roti” is a prime and foremost necessity,” he added.

He said that it is still ensured that the monthly bill of protected class does not exceed Rs900 on consumption of 0.9 hm3 in a month. He said the fertilizer prices are kept in line with the Mari gas field’s cost of gas which is Rs580 per mmbtu, only an Rs70 increase over the previous price just not to affect the farmers getting urea and ensure food security.

He said that industry tariffs are set so as to rationalise the gas prices in the north and south regions and create a level playing field for everyone by offering gas at the same price to existing and new industries.

The minister said that the petroleum division in consultation with stakeholders has developed a regionally competitive energy tariff (RCET) considering the industries in India, Bangladesh, and Vietnam, which have developed themselves and emerged as net exporters.

He said measures are focused on the conservation of gas in sectors where gas use is inefficient, unbridled, or where alternate fuels are available. “More than 50 percent of the commercial category consumers in the country already use LNG. More than 27 percent of the gas connections in the CNG category are RLNG-based. The efficiency adjusted cost of CNG is almost half of that with petrol in equivalent terms,” he added.

The minister said the pricing decision has been a very difficult one for the caretaker government but the decision had been taken in the best interest of the country.

He said, “If the gas prices are not increased, the estimated revenues for financial year 23-24 would be Rs513 billion i.e. deficit of Rs191 billion from estimated revenue requirement (ERR) of financial year 23-24 on NG and deficit of Rs210 billion on RLNG, cumulatively Rs.400 billion.”

He said the deficit of the two gas companies had increased manifold during the last 10 years due to the difference of the purchase and sale price of gas.

The minister said that inadequate gas pricing in the previous governments and no financing for the imported gas diversion over the years dented the national exchequer and created a circular debt stock of Rs2.1 trillion (without interest).

Muhammad Ali expressed the hope that adjusting gas prices according to the directions of the Oil and Gas Regulatory Authority (OGRA) would help reduce the growth of the circular debt, lower inflation, control interest rates, and decrease fiscal deficits.

He also anticipated that the new gas prices would attract more international companies to invest in the exploration sector.