Pakistan approves sharp increase in gas prices for IMF bailout package

Pakistan approves sharp increase in gas prices for IMF bailout package

Pakistan on Monday approved massive increase in natural gas prices ahead of final round of talks with the International Monetary Fund (IMF).

The Economic Coordination Committee (ECC) of the cabinet approved the increase in gas prices in its meeting held on Monday, which was chaired by Finance Minister Ishaq Dar.

According to reports the government increased prices for commercial users by 29 per cent to Rs1650/mmbtu. For exporters the new prices after 34 per cent increase will be Rs1100/mmbtu. Meanwhile, for the general industries the prices of gas have been increased by 13.9 per cent to Rs1200/mmbtu.

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The government has increased the gas prices for CNG and cement companies by 32 per cent and 15 per cent to Rs1805/mmbtu and Rs1500/mmbtu, respectively.

Analysts believed that the government had increased the massive prices in gas to satisfy IMF conditions for next tranche of $1.2 billion.

The ECC meeting was attended by Federal Minister for Commerce Syed Naveed Qamar, Federal Minister for Power Khurram Dastgir Khan, Minister of State for Finance and Revenue Dr. Aisha Ghous Pasha, Shahid Khaqan Abbasi MNA/Ex-PM, SAPM on Finance Tariq Bajwa, Federal Secretaries and other senior officers.

While Federal Minister for Industries and Production Syed Murtaza Mahmud, Minister of State for Petroleum Musadik Masood Malik and Governor State Bank of Pakistan (SBP) attended the meeting virtually through video link.

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Ministry of Energy (Petroleum Division) tabled a summary on Natural Gas Sale Pricing FY 2022-23 and presented tariff proposals for all consumer categories in accordance with RERR FY 2022-2023.

The ECC after detailed discussion approved gas price revision proposal for domestic, commercial and power sectors for six months i.e. January to June, 2023.

Ministry of Economic Affairs presented a summary on G-20 Debt Service Suspension Initiative (DSSI). This debt relief was announced in April 2020 for IDA eligible countries to mitigate the socio-economic impact of Covid-19.

Under this initiative debt relief was extended through the suspension of principle and interest payments. So far, 37 debt rescheduling agreements with 15 creditor countries have been signed.

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Foregoing in view, the ECC allowed the Ministry of Economic Affairs for signing of debt rescheduling agreement with Russia for debt suspension of Covid related amount US$ 14.53 million. Ministry of Poverty Alleviation and Social Safety presented a summary on enhancement of BSIP budget.

The meeting was briefed on the on-going BISP programmes including Unconditional Cash Transfer (UCT) Programme “Benazir Kafaalat” covering around 9 million families, two Conditional Cash Transfer (CCT) programmes namely Benazir Taleemi Wazaif and Benazir Nashonuma.

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Besides, this disbursement of cash assistance to affectees of floods as emergency relief of Rs. 25,000/- was provide per affected family to around 2.7 million families. In Conditional Cash Transfer Programme, there has been accelerated enrolments in Benazir Taleemi Wazaif and it is anticipated that additional 1 million children will be enrolled by the end of June, 2023.

Also BISP has extended CCT Benazir Nashonuma to all the districts of the country. The ECC after discussion granted Rs. 40 billion as Technical Supplementary Grant to BISP to meet its budgetary requirements for increase in the unconditional and conditional grants.