In a recent development, Caretaker Energy Minister Muhammad Ali has announced a significant reduction in the availability of gas during the upcoming winter season, dealing another blow to the masses following a substantial increase in gas tariffs.
The decision was revealed during a press conference held alongside interim Information Minister Murtaza Solangi, where the energy minister elaborated on the government’s challenges in providing round-the-clock gas access.
Minister Ali clarified that gas availability will be limited to specific hours during the day, including the morning, afternoon, and evening. This restriction is a response to the government’s inability to maintain continuous gas supply.
To address the impending gas shortage during the winter months, the government has taken measures to secure two Liquified Natural Gas (LNG) cargoes for December 2023 and intends to order an additional two LNG cargoes for January 2024.
It’s worth noting that in Pakistan, approximately 30% of the population relies on piped gas, while the remaining 70%, predominantly in rural areas, depend on wood and Liquified Petroleum Gas (LPG) for their energy needs. A majority of piped gas users have been shielded from the recent tariff hikes, while the minister emphasized the disparity in pricing between urban and rural areas.
Minister Ali disclosed that there are approximately 10 million domestic gas connections, and tariff increases have not affected 57% of these consumers, particularly those in lower income brackets who benefit from protected tariff slabs. However, the fixed monthly price, which was previously set at Rs10, has been increased to Rs400, resulting in monthly bills ranging from Rs600 to Rs1,300. The government’s objective is to bring these prices closer to those of LPG.
Regarding consumption patterns, the minister noted that 57% of domestic consumers account for 31% of total gas consumption and will now contribute 11% of the sector’s total costs. Meanwhile, the wealthiest 3% of consumers, who consume 17% of the gas, will be responsible for 39% of the expenses. Similarly, middle slab consumers, constituting 39% of the total, consume 52% of the gas and pay 49% of the costs.
Minister Ali also highlighted that gas tariffs for the power sector and tandoors (traditional ovens) have not been raised, and the fertiliser sector has been protected from increases.
In the commercial sector, including hotels and restaurants, the tariff has been standardized at Rs3,600 per mmBtu, eliminating the previous differentiation between local gas and Regasified Liquefied Natural Gas (RLNG)-based supplies.
Furthermore, the tariff for Compressed Natural Gas (CNG) has been increased to 80% of petrol prices, a substantial shift from the previous pricing structure where CNG was nearly half the price of petrol.
The minister emphasized that the caretaker government has taken steps to freeze the energy sector’s circular debt following tariff adjustments, aligning with commitments made to the International Monetary Fund (IMF). He also cautioned that over the next two years, local pipeline gas would become unavailable for households, necessitating a transition to LPG, with a moratorium on new gas connections.
In conclusion, these measures represent a complex set of changes to Pakistan’s gas tariff structure, aimed at addressing fiscal challenges while attempting to protect vulnerable segments of the population from excessive tariff increases. The decision to limit gas availability during the winter months underscores the government’s struggles to balance energy supply and demand while addressing financial constraints in the sector.