Govt set to ratify soaring gas charges before IMF review

Before seeking final dates for the second review of the ongoing IMF loan programme, the government has convened a special meeting of the Economic Coordination Committee (ECC) on Monday (today) to discuss and clear an unprecedented surge of 3,900 per cent in fixed monthly charges and a 194pc hike in consumer rates for natural gas. These price adjustments, set for cabinet’s ratification on Tuesday, aim to be implemented retroactively from Oct 1. This is on top of the petroleum division’s request to shift towards a new gas pricing mechanism on the pattern of the weighted average cost of local and imported gas (WACOG) to ensure the actual cost of gas supply and eradicate the flow of the gas sector’s circular debt, which stands at Rs2.1 trillion as of this June, according to a summary submitted to the ECC. However, there’s a disparity in reported figures. Caretaker Petroleum Minister Muhammad Ali, a former chairman of the corporate watchdog SECP, has cited the gas sector’s circular debt at a higher Rs2.9tr in press conferences. Interestingly, the summary he authorised for submission to the ECC also claimed that “price inaction until June 2024 will result in a revenue shortfall of Rs185bn on natural gas” and Rs210bn anticipated during winter to divert LNG to domestic consumers, hence a combined addition of Rs395bn this fiscal year.