Monday, May 29, 2023

CCOE refuses high gas prices

The Cabinet Committee on Energy (CCOE) has rejected a plan for a significant hike in gas prices up to 36 percent, citing concerns about political backlash. The idea was rejected due to concerns about political backlash.

Domestic gas slab prices for winter months between November 2021 and February 2022 were submitted by the Petroleum Division as part of a summary for adjustment by the National Gas Slab Tariff Commission.

According to sources, the CCOE observed that the proposed rise in gas rate would be subject to political consideration, and that, as a result, approval from Prime Minister Imran Khan should be sought.

During the discussion, members of the cabinet body expressed their opinion that the government should cap the consumer price of electricity at Rs12 per unit during the winter season and increase the price of gas in order to discourage its consumption.

At the moment, the country is heavily reliant on liquefied natural gas (LNG) imports, which were once much greater.

During many meetings, it has also been discussed if the government should also set a price cap on LNG during the winter season to keep prices stable.

The goal was to lower the price of energy in order to encourage users to switch from natural gas to electricity in order to avoid a possible gas shortage during the winter season, which was anticipated.

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According to sources, the Petroleum Division has not proposed any increases in the cost of natural gas for consumers who fall into the first two tariff categories.

The price of natural gas in the first two slabs is Rs121 per million British thermal units (mmbtu) and Rs300 per million British thermal units (mmbtu). Consumers in the first two brackets pay an average monthly bill of approximately Rs308 and Rs957, respectively.

There is around 32 percent of total consumers who fall into the first slab and approximately 25 percent who fall into the second slab.

A 15.05 percent increase in the price of natural gas for consumers in the third slab, from the current Rs553 to Rs683 per mmbtu, according to sources in the Oil and Natural Gas Division. Their current monthly bill amounts to around Rs3,733. The proposed increase is expected to result in a net increase in the bill of Rs562 as a result of the proposed increase.

It recommended a 28.14 percent increase in the price of mmbtu for consumers in the fourth bracket, from the current Rs738 to Rs1,000 per mmbtu. These consumers are currently paying a monthly charge of approximately Rs8,016; the proposed increase is expected to result in a net increase of Rs2,256 per unit.

The Petroleum Division had suggested a 35.4 percent increase in gas tariffs for users in the fifth slab and a 35.8 percent increase in gas tariffs for consumers in the sixth slab, respectively. At the moment, these clients are required to pay monthly costs of around Rs14,400 and Rs25,494 per mmbtu, respectively. It recommended an increase in the tariff per mmbtu from Rs1,107 to Rs1,500 and from Rs1,460 to Rs2,000, respectively, from Rs1,107.

The planned increase would have resulted in an increase in the monthly bill of Rs5,095 for the fifth slab and Rs9,128 for the sixth slab, depending on the slab.

On Friday, Asad Umar, Federal Minister of Planning, Development, and Special Initiatives chaired the CCOE meeting.

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