ECC approves revision to gas tariff for industry, rejects hike for domestic sector

The Economic Coordination Committee (ECC) of the Cabinet Saturday approved an increase in the gas tariff for captive power plants from Rs 3,000 per mmbtu to Rs 3,500 per mmbtu. This decision aims to ensure the necessary revenue for the gas sector during FY 2024-25, according to the Finance Division.

However, the committee did not agree to raise the tariff for domestic consumers to shield them from additional burdens, the Finance Division stated in its announcement.

Gas price hike: Industrialists urge govt to revisit decision

“The ECC, however, instructed the Petroleum Division to take necessary measures for the imposition of a grid transition levy on the captive power plants to enhance the energy sector efficiency,” the statement stated.

The committee met today to discuss a summary submitted by the Petroleum Division for an upward revision of the indigenous gas tariff for industry (captive power) as well as non-protected domestic slabs.

The meeting was chaired by Federal Minister for Finance Senator Muhammad Aurangzeb with Federal Minister for Petroleum Mr. Musadik Masood Malik, Minister for Power Sardar Awais Ahmed Khan Leghari Minister of State for Finance and Revenue Mr. Ali Parvez Malik, Chairman OGRA, Chairman SECP, Federal Secretaries, and senior officers from the relevant divisions in attendance.

Ogra recommends significant hike in gas prices

The decision comes weeks after industrialists strongly opposed the proposed gas price hike, urging the federal government to reconsider protecting export-oriented industries and small and medium enterprises (SMEs).

Recently, the Oil & Gas Regulatory Authority (Ogra) requested the federal government to increase gas rates by up to 26 percent to generate about Rs. 847.33 billion during the current fiscal year.

Under the new tariff structure, the average gas price has been set at Rs. 1,762.51 per MMBTU for Sui Southern Gas Company (SSGC), and Rs1,778.35 per MMBTU for Sui Northern Gas Pipelines Limited (SNGPL).

Over the past couple of years, the SME sector suffered huge losses due to the increasing cost of production, mainly due to higher prices of utilities including electricity and gas. Further, higher taxation on the salaried class in the last budget also made it challenging for SMEs to retain competent human resources at present salaries.