CCOE Refused to Massive Increase in Gas Prices

The Cabinet Committee on Energy (CCOE) has turned down a proposal for a massive increase in gas tariff of up to 36%, fearing political backlash.
The Petroleum Division submitted a summary for revision in gas slab tariffs for domestic consumers covering winter months from November 2021 to February 2022.
Sources said that CCOE observed that there would be political consideration of the proposed increase in gas tariff and therefore approval should be sought from Prime Minister Imran Khan.
During the meeting, cabinet body members were of the view that the government should cap the consumer price of electricity at Rs12 per unit in the winter season and increase the price of gas to discourage its use.
At present, the country is mainly dependent on liquefied natural gas (LNG) imports that had been higher.
There has also been discussion during different meetings that the government should also cap the price of LNG in the winter season.
The objective was to reduce the price of electricity in order to shift consumers from gas to electricity in order to overcome possible gas crisis in the winter season.
Sources told The Express Tribune that the Petroleum Division had not proposed any increase in prices of gas for consumers falling in the first two tariff slabs.
The gas price for the first two slabs is Rs121 and Rs300 per million British thermal units (mmbtu) respectively. The average monthly bill for consumers in the first two slabs is around Rs308 and Rs957.
Around 32% of the total consumers fall in the first slab and around 25% in the second slab.
Sources said that the Petroleum Division had proposed a 15.05% increase in the gas price for consumers falling in the third slab from the current Rs553 to Rs683 per mmbtu. Their current monthly bill is around Rs3,733. The net increase in the bill is estimated at Rs562 with the proposed increase.
It proposed a 28.14% jump for the fourth-slab consumers from the existing Rs738 to Rs1,000 per mmbtu. These consumers are paying a monthly bill of around Rs8,016 and net increase is estimated at Rs2,256 per unit with the proposed increase.
The Petroleum Division had proposed 35.4% increase in gas tariff for the consumers falling in the fifth slab and 35.8% hike for the sixth slab. At present, these consumers are paying monthly bills of around Rs14,400 and Rs25,494 per mmbtu respectively. It proposed an increase in tariff to Rs1,500 from Rs1,107 and to Rs2,000 from Rs1,460 per mmbtu respectively.
The proposed increase would have increased the monthly bill of Rs5,095 for fifth slab and Rs9,128 for sixth slab.

The CCOE meeting was chaired by Federal Minister for Planning, Development and Special Initiatives Asad Umar yesterday.

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