The caretaker government has met another IMF condition by raising gas prices for domestic, commercial and industrial consumers ahead of the start of negotiations with the International Monetary Fund on the economic review for the next tranche of $70 billion. Gas prices have been increased by 200% from November 1, 2023. In this way, an additional burden of 350 billion rupees will be imposed on the consumers. The price hike is aimed at saving gas companies from bankruptcy, ensuring gas supply at real cost and ending the flow of revolving debt of the gas sector, which is expected to reach Rs 21 trillion in June 2023.  According to the announcement of the economic coordination committee of the cabinet, gas has become expensive up to 172% for domestic consumers, meter charges have been increased from 10 rupees to 400 rupees per month. 137% for commercial consumers and 193% for cement manufacturers.

An increase of 86.4% was approved for exporters and 117% for non-export industries. Subsidies to the wealthiest exporters and manufacturers were certainly reduced but not completely eliminated. 1650 per mmbtu for commercial customers, price of bulk supply of gas has been increased from 1600 to 2000 rupees, for CNG from 1805 rupees to 4400 rupees, but there has been no increase in the price of commercial customers of roti tandoor.  In the meeting, it was also directed to ensure uninterrupted supply of gas for the fertilizer industry.

Earlier, gas prices were increased by 113% in February, which burdened consumers by Rs 340 billion. In winter, gas load-shedding and continuous increase in prices will increase the problems of the common man. The ECC also approved the import of one million metric tons of wheat and two million metric tons of urea.

Gas price increase in the offing

The severe load shedding of electricity in summer and gas in winter days and the continuous rise in prices have made life difficult for the common man. The precondition for an extraordinary increase in gas prices before the IMF visits Pakistan in the coming days of its new assessment mission has been imposed, due to which the Ministry of Petroleum, while preparing a summary, has set the rate of increase to 200% effective from October 1, 2023.

According to the details, it is proposed to increase the fixed monthly charges for protected customers by 400 rupees and for domestic customers by 172%. Remember, the last hike in gas prices was on February 13, 2023, when the PDM government approved a 113 percent hike in gas prices with effect from January 1 to recover Rs 340 billion. After the new increase, consumers will face an eight-hour announced load shedding of gas and will pay the same rate as people using wood or other energy sources, according to the IMF's strategy. It is common in many countries and the majority of them are states that are deprived of its production or unable to meet the desired target and are indebted to others. Despite this there is stability in prices.Pakistan is rich in oil and gas, but serious efforts should be made to find them. The poverty found in the country and the current situation demands that the IMF should withdraw from the mentioned increase in gas prices considering this 70% of the population.On the other hand, the government should initiate steps to focus on news gas discoveries so that gas resources can be increased and the supply issues can be overcome.

At time when the country is faced with unprecedented energy woes, the common man is in dire situation.

One wonder as to where do we go. It is fact that Pakistan is blessed with countless deposits of oil, natural gas, coal but the same has not been exploited in real of the word. As a matter of fact, the energy resources play an important role in promoting rapid economic and industrial development. Internal and external companies are also exploring oil, gas and other mineral deposits in the homeland. We used to hear about new gas deposits and the last time it was in May when we heard that despots have been  discovered in Kirthar block of Dadu district of Sindh. Initially, this well will yield 7.8 mmscf of gas per day. Recently, large oil and gas reserves have also been discovered in Waziristan, Kirk and Dera Ismail Khan regions of Khyber Pakhtunkhwa, from which 39.12 million cubic feet of gas and 1840 barrels of oil can be extracted per day. Before this, apart from Sui, gas is being extracted from 13 places in Sindh and Potohar. Discovery and exploitation of new reserves will help reduce dependence on oil and gas imports and save valuable foreign exchange. It may be mentioned here that an estimated forty percent of our energy requirement are met from indigenous gas mainly from Balochistan and Sindh.

Our main industry like cement and in generation and manufacturing of various products, chemical fertilizer, thermal power generation apart from general factories, the sued of gas is the main factor. On the other hand, the dependence on gas from Sui and Balochistan is decreased and now it is mainly met by Sindh which can be gauged from the available statistics. According to an estimate, the ratio of gas production is 70% in Sindh, 12% in Balochistan, 10% in Khyber Pakhtunkhwa and 8% in Punjab, so we need to focus on gas exploration in Sindh in particular. According to economists, under the program given by the IMF, the government is specially focusing on enhancing the prices of fuel and electricity to cover the financial deficit, but in the process the common man will be hard pressed.

On the other hand, after the gas price hike, the fear of further increase in inflation has been expressed which is a matter of concern.  It is also said that due to the decrease of 10.8 and 11% in remittances and exports respectively and the situation of imports remaining unchanged, the extraordinary burden on the economy has become a challenge for the government.

Not only gas, other sectors are also on the IMF radar. According to sources, IMF says that Pakistan has the potential to raise revenues from the property sector and agricultural sector. IMF has also imposed the condition that serious measures should be taken to increase the tax revenue.

Published in The Daily National Courier, October, 27 2023

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