In order to comply with the International Monetary Fund's (IMF) demands to contain the spiralling circular debt, gas tariffs are expected to increase by up to 100% for several consumer categories.
The report states that the revised gas tariff summary has been completed and submitted for approval to the Economic Coordination Committee (ECC).
According to sources, the federal cabinet would get the report once it passed the ECC with flying colors. "The new rates would be applicable with effect from Oct. 1 after the federal cabinet's approval," they stated.
Circular debt for the gas sector has amounted to Rs2,700 billion.
The plan calls for an increase in use fees of up to 1 mmBtu from Rs2,000 to Rs3,500. According to the sources, if gas prices are not increased by the end of the current fiscal year, circular debt would rise by Rs. 46 billion, and the firms' shortfall would be close to Rs. 185 billion.
For customers of protected gas, the plan includes a sizable modification to fixed monthly prices.
The proposal calls for a significant 100% increase in gas prices for domestic users, while a projected increase of 198.33% may be imposed on other consumers.
According to the sources, these tariff revisions are part of the caretaker government's plan to deal with the issue of recurring circular debt and satisfy Fund obligations.
They said that the move will inevitably exacerbate Pakistan's inflation, which is already at an all-time high due to the country's frequent fuel and electricity tariff increases, leading to increased food costs; nonetheless, the increase in gas prices is a crucial requirement of the IMF plan.
The IMF requirement requires the cyclic debt reduction of the gas industry, which can only be accomplished by an increase in gas prices, as the fresh tranche is scheduled to be issued in November.