ISLAMABAD, Dec 31: The government on Wednesday approved an average increase of 7.5 per cent in gas prices, but rejected a proposal by the Oil and Gas Regulatory Authority to reduce petrol prices.

The price of compressed natural gas (CNG) has been jacked up by 10 per cent, a move against which the CNG association has planned countrywide strikes.

Independent power producers (IPPs) will now have to pay 17 per cent more for the gas they consume.

The increased rates will come into effect from Thursday (Jan 1, 2009) and are based on the “price of crude oil in the international market over the past six months”.

A notification will be issued shortly, official sources said.

The rate of gas consumed by captive power plants, industrial consumers, fertiliser companies’ fuel plants and Wapda power plants has been raised by three per cent.

The tariff for domestic consumers in the first three slabs (up to 200 million btus per month) will be increased by three per cent.

The gas price for other domestic consumers, cement industry and commercial consumers has been hiked by six per cent.

The SSGC and SNGPL had sought a 40 per cent increase. The proposed increases have been forwarded to Prime Minister Yousuf Raza Gillani for approval.

The Pakistan People’s Party (PPP) lawmakers had assured the parliament a couple of weeks ago that gas prices would not be increased.

Sources told Dawn that Ogra had mooted a reduction in petrol price by Rs5, diesel (Rs7) and kerosene oil (Rs6) in line with the trend in the international market.

The government is earning Rs27.32 to Rs28.15 a litre through the petroleum development levy on petrol, Rs37.43 to Rs38.35 a litre on HOBC, Rs12.95 a litre on kerosene and Rs12.1 on diesel.