ISLAMABAD: The opposition outright trashed the government’s plan to raise gas tariffs up to 35 percent for domestic consumers for the coming winter season as National Assembly opposition leader Shehbaz Sharif on Saturday said strongly condemned the reports of 35 percent increase in gas prices and demanded the immediate withdrawal of the decision.

Note that the Petroleum Division has prepared a summary of the price increase for gas consumers. It would appear that the reverse gas tariff plan proposed by the government seeks to massively increase prices for 43% of sales volumes in order to partially finance the cost of gas supply to low-end “protected” consumers.

This is part of the new cross-subsidy mechanism for gas prices being considered by the Cabinet Committee on Energy (CCoE) to force a switch from space heating and water to electricity instead of electricity. natural gas during the four peak winter months (November-February). It remains to be seen, however, whether enough electrically efficient space and water heaters are available in the market to facilitate this transition at a cost that is affordable and acceptable to consumers.

The petroleum division reported that about 47% (over 5.3224 million) of gas consumers in the first slab consumed about 32% of the gas volumes. They are billed at the rate of Rs121 per million British thermal units (MMBTUs) and their monthly bill is Rs308.

Another 30% of the 3.424 million consumers of the second slab (up to 100 cubic meters) consume around 25% of gas sales. They are billed at Rs300 per MMBTU and their monthly bill is currently Rs957. This means that 57 pc of gas is consumed by 77 pc (or 8.7464 million) of consumers that the Ministry of Petroleum seeks to protect without price change.

The third slab (200 cubic meters per month) concerns nearly two million consumers with 18pc of gas consumption. They are currently billed at Rs 553 per unit and their monthly bill stands at Rs 3,733. The petroleum division has sought to increase its rate by around 24% to Rs 683 per unit, which shows an increase in the monthly bill. at 4,300 Rs.

In addition, only 3.3% (or 371,000) consumers fall into the fourth slab with a monthly consumption of 300 cubic meters and are currently billed at Rs 738 per unit, which translates into a monthly bill of Rs 8,016. The petroleum division suggested that the price of this category increase by 35% to Rs 1,000 per unit, which would increase its monthly bill from Rs 2,260 to Rs 10,272.

For the fifth slab with a consumption of up to 400 cubic meters, around 93,000 consumers (0.8 pc of the total) are currently billed at Rs 1,107 per unit, bringing their bill to Rs 14,400 per month. The petroleum division proposed a higher rate of 36 pc of Rs1,500 per unit for consumers in this category, thus increasing their monthly gas bill from Rs5,100 to Rs19,500.

There are about 49,400 (or 0.4 pc) consumers in the sixth and final bracket of over 400 cubic meters of monthly consumption who use about 3 pc of gas sales. They are currently billed at Rs 1,460 per unit which the petroleum division has suggested to increase from 37 pc to Rs 2,000 per unit. The monthly bill for this category at Rs25,500 would increase by Rs 9,130 ​​per month to reach Rs 34,625.

The petroleum division reported that two public sector gas utility companies – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) – were facing challenges as their local gas supply sources grew. are depleted and no net increases or additions have been witnessed. Importing RLNGs to fill the supply gap had a substantial impact on their full cost recovery due to the drastic differences between domestic gas and imported RLNG tariffs.

Faced with the full availability of gas in Pakistan, the residential sector has become the second largest consumer of gas after electricity and fertilizers. The main use of gas for residential consumers is cooking in the summer and additional use for water heating and space heating in the winter, resulting in a sharp increase in demand and consumption of gas – approximately 50% increase for SSGCL and over 100% for SNGPL.

The substantial difference in the domestic gas and RLNG tariff increased the unrecovered tariff differential to Rs104bn for SNGPL alone. Historically, the local gas tariff structure for residential consumers has remained subsidized and the difference to the actual cost of supply was charged to other consumers, namely commercial, industrial, electricity and CNG consumers.

This lower tariff structure for residential consumers has resulted in the accumulation of tariff differentials in the balance sheets of SSGCL and SNGPL which are unable to pay the cost of gas purchases from public sector gas producers.

The current gas tariff structure for residential consumers was approved in July 2019 and is still in place. The current tariff for domestic consumers translates to an average selling price of Rs 400 per MMBTU of gas for SSGCL and Rs 350 per MMBTU of gas for SNGPL, respectively, while the average cost of supply for the two companies is of Rs 683 per MMBTU.

The oil division argued that natural gas was a scarce resource and its efficient use for growing the economy was inevitable.

Therefore, residential consumers using gas for space and water heating should switch to electricity to reduce capacity payments relative to installed power generation capacity as well as to minimize the load on the electricity supply. gas supply chain.

Impact on consumers:

According to the data, there will be an additional bill of Rs. 562 for using gas up to 200 cubic meters, Rs. 2,256,000 for 300 cubic meters and Rs. 5,095 for using 400 cubic meters and Rs However, it would not apply to domestic consumers using gas up to 100 cubic meters.

According to the document, the monthly bill of Rs 8,000 will reach Rs 10,272, the monthly bill of Rs 14,400 will reach Rs 19,000 and the monthly bill of Rs 25,495 will reach Rs 34,622. monthly rate of Rs. 3,733 will reach Rs. 4,295. In addition, 78% of consumers who use 57% gas will avoid the additional charge. The companies Sui Southern and Sui Northern Gas are facing a reduction in gas reserves. The average cost of gas for the two companies is Rs. 683 per MMBTU.

Sui Southern’s average selling price is 400 MMBTU while Sui Northern’s selling price is Rs. 350 per MMBTU. Receiving Rs 104 less than the RLNG, gas consumption in the southern region of Sui drops from 400 to 600 mmcfd in winter.

Shehbaz wants the proposal to be withdrawn immediately:

Pakistani Muslim League-Nawaz (PML-N) chairman and opposition leader in the National Assembly, Shehbaz Sharif, strongly condemned reports of increased gas tariffs, saying the government was fulfilling the conditions imposed on the people by the IMF on behalf of the budget.

“The government lied to the nation about the tax-free budget, when what we said becomes true today,” he added.

“We said that after the budget there would be a new wave of inflation and taxes, the government proved our point, the increase in gas prices was unjustified and another serious government folly”, said the president of the PML-N.

The opposition leader further maintained that the people would not be able to bear the burden of inflation further, adding that the oppression should be stopped. “Imran Niazi is trying to wage a civil war in the country with its successive follies.”

Shehbaz Sharif said that there has already been a historic increase in gas and electricity prices, a further increase in prices will not solve the problem, but the problem is the incompetence and corruption of the rulers.

The former Chief Minister of Punjab mentioned that if the increase in gas and electricity prices had solved the problem, the revolving gas debt would not have been borne by the nation after the increase in the electricity. “Rising prices will drive up the price of bread and increase people’s bills,” he added.

“I had said before that the government made 9/11 the economy of the country, now they balance the nation with inflation.”

He added that Imran Niazi should go home instead of committing the sin of killing the nation with inflation. “Everything, including flour, sugar, ghee, medicine, electricity and gas, has exceeded inflation limits. Inflation has made the lives of the poor miserable, ”he concluded.