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ISLAMABAD: Prime Minister Imran Khan approved on Tuesday increase in gas prices up to 46 per cent as proposed by the Oil and Gas Regulatory Authority (Ogra).
Top officials of the Petroleum Division on Tuesday explained to Prime Minister Imran Khan why it was essential for the government to hike natural gas prices.
The officials also told the prime minister that gas worth Rs50 billion a year is being stolen. Imran asked them to submit a plan to stop the theft.
The premier made the decision during a briefing on gas sector. Mr. Khan also ordered steps to control annual gas theft of Rs50 billion.
After the PM approval, the summary for the gas prices increase will be presented to the next meeting of the Economic Coordination Committee (ECC) of the Cabinet. During the briefing, the PM was informed that there is no other way except the price increase to bridge the revenue gap of the Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC).
The price hike was proposed at the first meeting of the Economic Coordination Committee (ECC) of the federal cabinet on August 29, but the decision was deferred. Following Tuesday’s briefing, the proposed gas price increase would be submitted at the next meeting of the ECC for approval.
A senior official at the meeting said “There is no other way out,” when asked if the prime minister was convinced about the gas price increase when he had been talking about reducing the burden on common people.
Led by federal minister Ghulam Sarwar Khan, the officials said the proposed 180 percent hike in prices for domestic users and 30 percent for commercial buyers, recommended in June by the Oil and Gas Regulatory Authority, was necessary to avoid the financial collapse of the two public sector Sui gas companies. They were in crisis because the previous administration had not raised gas prices for four years.
Under the new gas tariff hike, once implemented, it comes with 186per cent increase in gas rates for poorest categories of domestic and commercial consumers, while the prescribed rates for other categories – industrial, cement, CNG, power and commercial – have been increased by 27 to 31 per cent for the two companies.
Ogra says SSGC, that serves Sindh and Balochistan, will need Rs167 billion during the next financial year to fund its programmes. Therefore, it has approved 45.54pc (Rs184.34 per unit) increase in the average prescribed price from its existing rate of Rs404.75 to Rs589.09 per unit.