IMF Conditions: Govt Okays Up To 113pc Hike In Natural Gas Tariff

IMF Conditions: Govt Okays Up To 113pc Hike In Natural Gas Tariff
In a bid to revive the International Monetary Fund (IMF) program, the government has approved a hike of up to 113 percent in the natural gas tariff to collect Rs310 billion from consumers in six months.

This increase in natural gas tariffs will cost citizens an additional Rs 736 billion in taxes and energy costs.

The Economic Coordination Committee of the Cabinet (ECC) decided to impose a tax of 113% on domestic consumers with monthly consumption of more than four cubic meters.

Domestic consumers' natural gas tariff was raised from 8.5% to 113%. Gas prices had been raised from 10.4% to 105% for bulk, commercial, power producers, fertilizer plants, cement plants, exporters, general industry, and CNG stations.

The price hike was clearly intended to keep gas-supply companies from going bankrupt, as they had experienced a Rs 577 billion revenue shortfall since 2013.

The Petroleum Division tabled a summary on Natural Gas Sale Pricing FY 2022-23 and presented tariff proposals for all categories of consumers in accordance with the Revised Estimated Revenue Requirements (RERR) for the fiscal year 2022–23, according to the Ministry of Finance.

"The ECC, after a detailed discussion, approved a gas price revision proposal for domestic, commercial, and power sectors for a period of six months—January to June 2023," according to the statement.

It is worth noting that the government has met two of the IMF's conditions so far, with several more pending for reaching a staff-level agreement.

The government had already increased the electricity tariff by Rs3.30 to Rs15.52 per unit to recover Rs237 billion by June 2023. However, another burden of Rs189 billion would be imposed in the form of a rise in taxes by June 2023.

Although the government is implementing one condition after another set by the IMF to revive the program,  it has not yet shown its readiness to minimize the cabinet size and impose taxes on businessmen and the stock market.