Under directives from the International Monetary Fund (IMF), the government is preparing to equalize the gas tariff for captive power plants (CPPs) with Re-gasified Liquefied Natural Gas (RLNG) prices starting July 1, 2024. This move follows discussions with senior officials from the Energy Ministry, who highlighted the necessity of this adjustment in response to IMF requirements.
Currently, the gas tariff for CPPs stands at Rs2,750 per MMBTU, with plans to increase it to match RLNG prices. This adjustment is seen as crucial in meeting IMF obligations and addressing inefficiencies in the energy sector.
Additionally, the government is considering a possible increase in gas tariffs for the power sector, currently at Rs1,050 per MMBTU. Discussions have also touched on the challenges faced by gas companies, including Sui Southern’s request for a tariff hike and Sui Northern’s proposed increase from July 1, 2024.
While there is a recognition of the need for tariff adjustments, particularly for industrial and domestic consumers, officials are cautious about imposing excessive burdens. The focus is on rationalizing assumptions, managing previous year shortfalls, and reviewing RLNG usage to mitigate tariff hikes.
The overall aim is to balance revenue requirements with consumer affordability, taking into account the impact on circular debt and ensuring sustainable energy pricing in the long term.
Story by Khalid Mustafa
