The Petroleum Ministry is preparing to implement a new plan that will see gas prices increase by up to 60 percent. This decision comes as part of an effort to manage the country’s revolving debt, which has been identified as a key priority for the caretaker government.
The proposed price hike follows predictions from analysts that the International Monetary Fund (IMF) would question the federal government’s previous decision to delay the notification of a gas tariff increase. This increase was initially determined by the Oil and Gas Regulatory Authority in June.
Despite public calls for relief on energy bills, the government has found itself with no other option but to raise gas rates significantly. The new plan is expected to provide an immediate solution for the interim administration as it grapples with economic management challenges.
The Petroleum Ministry’s plan, which has received approval from the federal cabinet and engaged provincial authorities, aims to standardize gas prices across the country. Under the new scheme, all consumers, regardless of their location, will pay the same rate. This rate will be based on the weighted average cost of gas.
Currently, domestic petrol is priced at $8 per MMBtu, while imported LNG costs $13 per MMBtu. The ministry’s proposal seeks to bridge this $5 gap through a swift increase in gas prices for all consumers. This measure is anticipated to reduce the gas sector’s revolving debt.
Furthermore, the new plan will address the issue of LNG consumption for fertilizer manufacturing. At present, producers receive LNG at discounted rates, a practice that has contributed to the growing revolving debt. Once the new plan is implemented, manufacturers will be required to pay the full market price for LNG.
The implementation of this plan over the coming months is expected to have a significant impact on consumers across the board. However, it is seen as a necessary step towards stabilizing the country’s economy and managing its revolving debt.