The federal government authorized on Monday a hike in natural gas prices for several customer categories, effective November 1, 2023. The Oil and Gas Regulatory Authority’s (OGRA) recommendations served as the basis for this judgment.
The Cabinet’s Economic Coordination Committee (ECC) had already decided to increase natural gas prices on October 23, 2023, before to this decision. On October 30, 2023, the Federal Cabinet convened and returned this ruling to the ECC for reexamination.
In the end, the ECC accepted the updated natural gas pricing on October 30, 2023. The decrease in natural gas reserves (5–7% per year) and the increased price of imported fuel (LNG) are the causes of this increase. The cost of producing, distributing, and transmitting gas has increased due to inflation, and the value of the Pakistani rupee has declined dramatically in relation to the US dollar.
Previously, the pricing of natural gas was in the hands of governments instead of being strengthened by regulations and made transparent and efficient. As a result, there was insufficient pricing for gas, no funding available for diverting imported gas, and PKR 2.1 trillion (interest-free) in circular debt.
Cheap natural gas was helping some of the nation’s most lucrative companies because it was affordable, but low-income people, such as small-scale enterprises and impoverished farmers, were not benefiting from the same advantage. The caretaker administration had difficulties in deciding how much to raise prices since it needed to strike a balance between affordability and the long-term viability of the gas supply system.
The most recent price rise took place in January 2023, following a two and a half year pause. In the fiscal year 2022–2023 alone, there was a rise of PKR 461 billion due to the inaction.