Govt plans new slab for poor gas consumers

ISLAMABAD: Amid poli­tical pressure, the government is likely to create a new slab for poor domestic consumers with minimal impact of proposed 46 per cent increase in gas tariff.

The Economic Coordina­tion Committee (ECC) of the cabinet will meet on Monday (today) to consider the consequences of creating four domestic slabs from the existing three.

The gas price hike has remained part of discussions of all the ECC meeting held since the present government took over last month.

The ECC could also take up for discussion a report of the auditor general of Pakistan on payment of Rs480 billion against circular debt in 2013 by the PML-N government, besides the issue of recent surge in the prices of liquefied petroleum gas.

Informed sources said two teams of the Oil and Gas Regulatory Authority (Ogra) and the petroleum division and their subordinate gas utilities would brief the ECC meeting on distribution of domestic consumers into four slabs instead of three. This will be done by carving out a lifeline consumer category with monthly consumption of 50 cubic metres that would get limited increase in rates.

At present domestic consumers have three categories — those consuming 100 cubic metres per month consumption are charged at Rs110 per mmbtu (million British thermal unit), 300 cubic metres at Rs220 and 600 cubic metres and above charged at Rs600 per mmbtu.

Ogra had determined an average 46pc increase in gas price with a total revenue impact of about Rs200 billion, including the highest 186pc increase for first two slabs of domestic consumers, to bring the tariff closer to the actual cost of gas. The government has the powers under the law to switch price increase among various consumer groups and slabs without changing the overall 46pc increase.

A summary moved by the petroleum division about gas prices on the basis of Ogra determination has proposed 186pc increase in prices for the two lowest domestic consumer slabs. It has proposed an increase in the monthly price of the first slab of 100 cubic metres from Rs110 to Rs315 per mmbtu and from Rs220 to Rs629 per unit for the slab of up to 300 cubic metres. For the third domestic slab of above 300 cubic metres, fertiliser fuel, general industry and captive industry, the summary has worked out a 30pc increase in the price from Rs600 to Rs780 per mmbtu.

For old fertiliser, the tariff has been proposed to go up by 30pc from Rs123 to Rs160 per mmbtu, for power plants by 30pc from Rs400 to Rs520, for cement plants from Rs750 to Rs975 and for CNG and commercial consumers by 30pc to Rs911 from Rs700 per mmbtu.

The petroleum division said the regulator had worked out a 30pc increase in gas sale rates for all consumers, except the domestic sector where an increase of 186pc was proposed. Even with this increase, the proposed tariff depicts a 50pc cost recovery for the first slab and 100pc for the second slab.

Interestingly, the increase in gas prices for the SSGC is proposed relatively on the lower side — between 14pc and 168pc — but given the government policy of uniform gas tariff across the country, the SNGPL rates of 30pc to 186pc have to be followed, according to the petroleum division’s summary.

Published in Dawn, September 17th, 2018