ISLAMABAD, Feb 27: The cabinet increased on Wednesday the gas tariff by 8 to 20 per cent for various slabs of domestic consumers with effect from March 1.

Official sources confirmed that the cabinet had also approved the dismantling of Pakistan Petroleum’s Gas Price Agreement, 1982, aimed at phasing out the gas subsidy in five years.

Petroleum Secretary Abdullah Yousaf told Dawn that there was no change in the gas prices for any other consumer group and added that a notification in this regard would be issued on Thursday.

The secretary said that an average 8.5pc increase had been approved by the cabinet and added that there would be no increase for gas consumption up to first 100 units. The tariff for first slab of 101-200 units would go up by 7.9pc, and for above 500 units by 20pc, he said.

After the dismantling of the PPL’s GPA, he said, the pricing would be market based. In the wake of the decision, the domestic consumer prices would also fluctuate with international oil prices.

Another official said that the total impact of the graduated increase would come to around 3pc to 13pc. He explained that all consumers of first 100 units would be charged at existing rates even if they crossed the 500-unit slab.

The increase for the slab of 200-300 units would be around 12pc followed by 14pc for 300-400 units, 17pc for 400-500 units and around 20pc for above 500 units.

Now the gas prices would be revised by the Oil and Gas Regulatory Authority on a six monthly basis that would ensure that subsidy to all consumers was removed in five years as a result of bringing gas of the Sui field on a par with production from new discoveries.

According to the calculations on which the cabinet based its decision, the gas tariff will go up by around 300pc in the next five years. Roughly, a 15pc average increase in gas price will take place every six months for at least next five years.

The last time the gas tariff went up by 14.4-39.4pc for industrial, commercial and domestic consumers was on March 17, 2001.

The increase for commercial, industrial and power sector is projected to remain in the vicinity of 100 to 150pc because they are currently subsidizing the domestic sector.

The subsidy being enjoyed by the domestic sector will be withdrawn gradually to link gas prices with the cost of supply.

In case of the PPL, the wellhead price for Sui and Kandhkot gas are currently being fixed far below its economical value. Wellhead prices of these fields would be linked to crude oil price in accordance with the 1997 Petroleum Policy. This will not only rationalize the gas prices being paid to the producers of these fields, but would also give them the real worth of their gas and fetch better price for the PPL at the time of its privatization, sources said.

Power sector is the largest gas consumer with a 31pc share, followed by fertilizer with 25pc, household with 21pc, industry with 20pc and commercial with 4pc.

UNIVERSITIES: Later, speaking at a press conference Federeal Education Minister Zubaida Jalal said that the federal cabinet on Wednesday approved a new criteria for grant of charter to the private universities and institutions, a package of incentives for low-cost private sector primary schools and restructuring of National Education Foundation.