The Presidential candidate of the Federation of Pakistan Chambers of Commerce & Industries’ (FPCCI) upcoming election for 2024 Muhammad Ali Sheikh has called for keeping check on soaring energy prices, as the recent hike in gas prices will lift the average Consumer Price Index further, hitting all sectors of the economy. In a statement on Thursday, FPCCI’s Presidential candidate said that the government had increased gas tariff with effect from this month 2023 just before the first IMF review under the $3 billion short-term loan program. This is the second gas price increase in 10 months. The gas price hike is a condition attached to the loan program. It may pave the way for the release of second IMF tranche of $700 million.

Calling to revert the decision, Muhammad Ali Sheikh said that the industries that may resort to price increase include fertiliser, cement and steel, which will make agricultural production and construction material more expensive. The inflation forecast was higher than the State Bank of Pakistan’s projection of 20-22 percent. The central bank governor has said that the expected gas price hike has been incorporated into the inflation forecast. The business leader said that feed and fuel stock prices are forecast to increase to Rs580 per million British thermal units (mmbtu) from the current price of Rs510, and to Rs1,580 per mmBtu from the current price of Rs1,500, respectively.

Earlier, the Oil and Gas Regulatory Authority (OGRA) had notified revised gas prices in February 2023 for consumers of Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL), after which Fauji Fertiliser Bin Qasim Limited (FFBL) and Engro Fertilisers jacked up fertiliser prices. As per proposed revised gas tariff for other categories of gas consumers, the gas price for bulk consumers was proposed to be raised from Rs 1,600/mmbtu to Rs2,000/mmbtu, while the gas price for special commercial (Roti Tandoor) will remain the same at Rs697/mmbtu and gas price for commercial consumers was proposed to go up from Rs1,650/mmbtu to Rs3,900/mmbtu.

Similarly, gas tariff for Liberty Power was proposed to increase from existing Rs2,406/mmbtu to Rs3,890/mmbtu while the gas price for Liberty Power was based on HSFO linked formula and not fixed by the government. Likewise, gas price for fertiliser plant of FFBQL (feed) was proposed to be increase from existing Rs510/mmbtu to Rs580/mmbtu while no change in gas price for Engro was proposed as Engro Fertilizer Ltd (new plant) has a claim of extended period for feed gas concessionary tariff of $0.7/mmbtu due to non-supply of gas by SNGPL and Sindh High Court has granted stay order to maintain the status quo.

However, gas price for fertiliser (fuel) was proposed to be increase from existing Rs1,500/mmbtu to Rs1,580/mmbtu. Furthermore, gas price for cement category of gas consumers was proposed to be revised from existing Rs1,500/mmbtu to Rs4,400/mmbtu. He informed that the gas price for export industry (process and captive) was proposed to be revised from existing Rs1,100/mmbtu to Rs2,050/mmbtu and the gas price for non-export industry (process and captive) was proposed to be increased from existing Rs1,200/mmbtu to Rs2,600/mmbtu.

Credit: Independent News Pakistan (INP)

Also, the gas price for the category of CNG was proposed to be revised from Rs1,805/mmbtu to Rs4,400/mmbtu. Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL) were public sector gas utility companies licensed from Oil and Gas Regulatory Authority (OGRA) for purchase, transmission, distribution and sale of gas to consumers in the country.

BMP nominated candidate of the president observed that for the past one and half year, the country was facing a serious financial crunch and continually relying on borrowing to meet its financial needs. He emphasised that persistent fiscal deficits has resulted in consistently high annual gross financing needs, averaging 27 percent of GDP over the past decade.