Home Latest News ECC Raises Gas Prices by 8.49% to 112.32%

ECC Raises Gas Prices by 8.49% to 112.32%

Tariff hike for industries expected to increase production costs, triggering further inflation in the coming months

by Staff Report

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The Economic Coordination Committee (ECC) on Monday approved a natural gas price hike on all slabs—a minimum increase of 16 percent and a maximum of 112.32 percent—with retrospective effect from Jan. 1 as part of measures to revive a stalled International Monetary Fund (IMF) bailout program.

Chaired by Finance Minister Ishaq Dar, the ECC meeting decided that in addition to the tariff increase, the government would charge a fixed rate of Rs. 50/month from “protected consumers” and Rs. 500/month from “non-protected consumers” in a bid to reduce the losses incurred during higher consumption of gas in winter. The ECC has established 10 slabs for residential consumers—four for “protected” and six for “non-protected”—with tariffs to remain unchanged for the utility of up to 25 units. However, consumers using between 25 and 50 units would see a 23.96 percent tariff hike. At the same time, consumers of 50 to 60 units would see their bills decrease by 33.3 percent, while those using between 60 and 90 units would see a 16.66 percent tariff decrease.

In the non-protected slabs, tariffs have been hiked by 33.3 percent for the use of up to 100 units, while there is an 8.49 percent hike for using between 100 and 150 units. Consumers of units between 150 and 200 would see an increase of 44.66 percent, while those utilizing between 200 and 300 units would have their bills increased by 49 percent. Non-protected consumers utilizing up to 400 units would see their tariffs go up by 80.66 percent, while residences using more than 400 units would see their bills go up by a whopping 112.33 percent.

Prices have also been increased for industrial and commercial consumers. While there has been no change to tariffs for tandoors, the commercial sector would see a 28.6 percent tariff hike, while the CNG industry’s pricing would go up by 31.65 percent. Export-oriented industries will see their natural gas prices jump by 34.31 percent, while non-export oriented industries will witness a 13.85 percent hike.

The increase in tariff for industries is expected to push up the cost of production, which observers maintain would also lead to higher prices and fuel inflation in the coming months.

The ECC meeting also approved Rs. 40 billion as a technical supplementary grant to the Benazir Income Support Program (BISP) to fund a budgetary increase in unconditional and conditional grants. Of this sum, Rs. 12 billion has been allocated for the Benazir Kafaalat Program covering 9 million families, while Rs. 22 billion would be disbursed as cash assistance to victims of last year’s floods.

The also agreed to a debt rescheduling agreement with Russia for $14.53 million, which was announced in April 2020 for IDA-eligible countries to mitigate the socioeconomic impact of COVID-19. So far, 37 debt suspension agreements with 15 creditor countries have been signed.

In addition to Dar, the meeting was attended by former prime minister Shahid Khaqan Abbasi, as well as Commerce Minister Naveed Qamar, Power Minister Khurram Dastgir and Minister of State for Finance and Revenue Aisha Ghous Pasha, among others.

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