High gas rates

Published September 11, 2023

GAS prices are set to rise again, and consumers should brace themselves for bloated bills in the winter months. The government had increased gas tariffs by up to 113pc for different categories of consumers in February for six months in order to strike a bailout deal with the IMF. This time around, gas prices are projected to go up by 50pc across the board to meet one of the key conditions of the short-term IMF loan facility approved in July. The gas price increase is going to be quite painful for consumers who are still grappling with inflated electricity bills for August. But as the interim ministers told a presser on Friday, the increase in gas rates ahead of winter was inevitable to contain the gas-sector circular debt that is growing at the rate of Rs350bn per year. Going up briskly, the gas sector has already piled up a debt, including interest, of Rs2.7tr — more than the Rs2.4tr debt in the power sector chain. The situation is indeed very alarming; there is no way around raising the tariffs for slowing down the debt build-up and discouraging the use of gas for heating purposes during winters.

However, just as we have seen in the case of electricity, periodic price hikes are not an answer to the country’s gas woes. The government needs to move beyond intermittent revisions of prices of the fuel for longer-term sustainability of the gas sector, given that we are fast exhausting the domestic resource through its wasteful and inefficient use. Gas pricing should be linked to the global market. Even though it would be quite difficult for low-income residential and small industrial consumers, they will accept it, provided the two gas companies also take effective measures to reduce their large system losses and control widespread gas theft to mitigate the burden on consumers who pay their bills. Gas utilities have launched a crackdown against gas theft in Punjab and KP under the orders of the army chief, and have arrested several people for stealing the fuel. The scale of the theft shows that such action will not yield the desired result without the help of the staff of the utilities. The question is: will the gas authorities continue the drive against gas thieves once the pressure on them is lifted after a few weeks?

Published in Dawn, September 11th, 2023

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