Business

Gas prices to go up 10-15% as govt aims to reduce circular debt

Published

1 year ago

Farwa

Circular debt currently stands at Rs1,250 billion.
Govt officials say govt is contemplating an increase in gas prices.
An increase of just 5% to generate Rs50 billion is likely, they add.

ISLAMABAD: The government is likely to hike gas prices by 10% to 15% in its bid to reduce circular debt that currently stands at Rs1,250 billion, The News reported on Thursday.

The decision comes after the International Monetary Fund (IMF) asked Islamabad to hike natural gas prices from January 1 next year. The lender is, however, aware of the government collecting Rs980 billion in revenue during the ongoing FY24 owing to the massive hike in gas prices by up to 193%.

“The authorities are contemplating an increase in the natural gas sale price by 10-15%, which will yield Rs100 billion in additional revenue. It is to be used for slashing the natural gas circular debt. However, the final decision to this effect has not been taken so far,” senior government officials of the Energy Ministry told the publication, adding that gas prices will increase by just 5% to generate Rs50 billion.

With the massive rise in gas price by up to 193% from November 1, 2023, the government will have surplus revenue of Rs275 billion which will be consumed in paying the Rs210 billion cost to be incurred against the RLNG diversion to the domestic sector in the ongoing winter season. It also offsets the loss of Rs65 billion incurred due to the failure of the government to notify gas price hike four months late.

The gas companies, Sui Southern and Sui Northern will submit their petitions with the OGRA seeking an adjustment in gas prices from January 1, 2023, which will most probably ask for a downward revision of gas prices.

However, the Fund wants the government to further increase gas prices by 10-15% from January 1, 2024. The Fund pinpointed that the government has failed to hike the gas tariff biannually for the last 10 years since 2013, causing a massive buildup in the gas circular debt.

Business

E&P Companies Will Invest $5 Billion in Pakistan’s Petroleum Industry

Published

15 hours ago

Farwa

Over the next three years, local and foreign companies involved in Pakistan’s oil and gas exploration and production sector have shown a strong desire to invest more than $5 billion in the nation’s energy sector.

Recent changes to the Petroleum Policy and the implementation of an exclusive tight gas policy, which provide better incentives and a more investor-friendly regulatory framework, are credited with the increase in investor confidence.

These strategic changes are expected to boost domestic energy production, open up new avenues for growth, and draw large amounts of both domestic and foreign investment.

Business

With inflation slowing, the SBP is anticipated to lower the policy rate for the eighth time in a row.

Published

16 hours ago

Farwa

Businesspeople anticipate another reduction in the policy rate when the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) releases the updated rate.

The interest rate for the upcoming two months will be announced by the central bank. It is still unclear if the rate will stay the same or be lowered to reflect stakeholder expectations.

According to experts, the policy rate will be lowered in order to further boost the nation’s economic sector.

Interest rates may be lowered for the seventh time in a row if the inflation rate declines significantly more than anticipated.

In its last six sessions, the MPC had cut the policy rate by 10 percent. In January 2025, it decreased the rate by one percent to 12pc.

12PC POLICY RATE

In January, the State Bank of Pakistan (SBP) announced cut in key policy rate by 100 basis points (bps) to 12 percent from 13pc in line with expectations of the business community.

The policy rate, which had been at 22 percent since June 2024, was slashed by 1,000 basis points to 12 percent.

The SBP governor said the decision was taken with careful consideration. “Although inflation is expected to decline next month (February), core inflation remains a pressing concern,” he stated.

Ahmed highlighted strong remittance inflows and robust export growth as key factors supporting the current account.