Is There going to be an Increase in Gas Prices?
Pakistan’s government has announced a possible 200 percent hike in its gas tariff that could see prices increase for residential and commercial customers across the country. This announcement has attracted criticism from gas users, as it could effectively double their monthly gas bills. The hike in the gas tariff is part of the government’s efforts to reduce its deficit and bring in more revenue, as the economy continues to struggle with increased debts and taxes.
Statement of Federal Minister
A statement from the Federal Minister for Petroleum, Ghulam Sarwar Khan, said that the government was required to raise the gas tariffs in order to reduce its losses, as the current rate was not generating enough revenue. The 200 percent hike in gas tariff would be the highest since 2011 when prices were increased by 43 percent. It would hit residential users the hardest, with a likely increase from Rs.220 per thousand cubic feet to Rs.670 per thousand cubic feet. The proposal proposes a 172% hike for domestic consumers and a 193% hike for others.
Effect of Increasing Prices on Consumers
This increased tariff would take a big hit on household budgets, as it could double the monthly gas bill for most private gas users in the country. Businesses, too, would be hit hard. Already, many people in the country struggle to pay the current rate of gas tariffs, and a 200 percent increase would undoubtedly put a further financial burden on them.
Reason for Increasing Prices
It is unclear why the government opted for such a steep increase in gas tariff, as it could lead to public outcry and even cause people to resort to illegal means to meet their gas needs. Moreover, it could further strain the already weak energy sector of the country. As part of the IMF’s request, the country’s gas prices were to be raised by 45 percent.
Official Notice of Increasing Prices
The government has yet to announce a timeline for the new tariffs, but it will no doubt face strong opposition if it finally implements a 200 percent hike. Many industry experts have urged the government to find alternative solutions to raising more revenues from the gas sector, instead of burdening its citizens and businesses with an unreasonable increase in gas tariff. Sources say the government is expected to announce a 45 percent hike in gas rates soon.