The Oil and Gas Regulatory Authority (OGRA) decided to cut gas prices by 10% for the upcoming fiscal year, however the federal government has chosen not to do so for all categories starting July 1, 2024.
Nonetheless, a national daily stated that gas costs for captive power plants (CPPs) will rise by Rs. 250 per mmBtu to Rs. 3000 per mmBtu in accordance with IMF expectations. With this rate increase, the government hopes to raise between Rs. 110 and Rs. 115 billion, which will go toward paying down the circular debt.
Sui gas companies have been directed by the Petroleum Division to utilize their excess revenue to reduce their circular debt. CPPs have drawn criticism from the IMF for their poor efficiency of 30–35%. resulting in a large natural gas waste. By January 1, 2025, the IMF has pushed the government to link all CPPs to the national power grid and match their gas costs with RLNG rates.In summary, starting on July 1, 2024, the government would gradually raise the price of CPP gas by Rs. 250 per mmBtu, and then by an additional Rs. 700 per mmBtu starting on January 1, 2025.
In the past, the Finance Division was asked to set aside money by the Petroleum Division in order to pay down the circular debt. But instead of include any subsidies in the FY25 budget, the finance ministry decided to use the money left over after keeping the current gas price to offset losses in the gas industry.
As of right now, home gas users are not eligible for any subsidies. Protected and certain non-protected consumers receive a net cross-subsidy of Rs. 110 billion annually from industrial and high-end domestic consumers. In order to stop future increases in the circular debt of the gas sector, the IMF has also ordered the government to modify gas pricing twice a year, on July 1 and January 1.
