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

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  • 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.

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Business

Irfan Siddiqui meets with the PM and informs him about the Senate performance of the parliamentary party.

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The head of the Senate’s Foreign Affairs Standing Committee and the PML-N’s parliamentary leader paid Prime Minister Muhammad Shehbaz Sharif a visit in Islamabad.

Senator Irfan Siddiqui gave the Prime Minister an update on the Parliamentary Party’s Senate performance.

Additionally, Senator Irfan Siddiqui gave the Prime Minister an update on the Senate Standing Committee on Foreign Affairs’ performance.

He complimented the Prime Minister on his outstanding efforts to bring Pakistan’s economy back on track and meet its economic objectives.

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Business

SIFC Increases Direct Foreign Investment: Investment in the Energy Sector Rises by 120%

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The Special Investment Facilitation Council is intended to help Pakistan’s energy sector attract $585.6 million in direct foreign investment in 2024–2025. The amount invested at the same time previous year was $266.3 million.

This is a notable 120% rise, mostly due to investments in gas exploration, oil, and power. Such expansion indicates heightened investor confidence and emphasizes the development potential in important areas.

The State Bank reports that foreign investment in other vital industries has increased by 48% to $771 million.

This advancement is a blatant testament to SIFC’s efficient investment procedure and quick project execution.

The purpose of the Special Investment Facilitation Council is to establish Pakistan as an investment hub by aggressively promoting regional trade and investment in the energy sector and other critical industries.

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Business

Discos report losses of Rs239 billion.

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When compared to the same period last year, the data indicates that discos have decreased their losses in the first quarter of the current fiscal year.

The distribution businesses recorded losses of Rs239 billion in the first three months of the current fiscal year, a substantial decrease from the Rs308 billion losses sustained during the same period the previous year.

Additionally, the distribution businesses’ rate of recovery has improved. It has increased to 91% in the first quarter of this year from 84% in the same period last year, indicating success in revenue collection.

Regarding circular debt, the Power division observed a notable change. Last year, between July and October, the circular debt grew by Rs301 billion. Nonetheless, this year’s first four months saw a relatively modest increase in circular debt, totaling about Rs11 billion.

These enhancements show promising developments in the electricity sector’s financial health in Pakistan, where initiatives are being made to accelerate recovery rates and slow the expansion of circular debt.

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