The federal cabinet has authorized a staggering 67 percent rise in natural gas prices for domestic customers.
Anwaar ul Haq Kakar, the interim prime minister, chaired a meeting of the federal cabinet on Thursday during which the decision was taken.
The raise was approved in order to comply with the Stand-by Agreement (SBA) requirements set forth by the International Monetary Fund (IMF).
The decision implies that gas prices for fertilizer plants would skyrocket by 700 percent, since the government has also revoked Rs50 billion in subsidies granted to a small number of fertilizer plants.
An announcement following the cabinet meeting stated that the decision will go into effect on February 1 and that the updated prices would be included in the new bills.
Tariffs for both protected and non-protected consumer categories have been adjusted, with increases ranging from 5% to 67%, according to the OGRA notification. Commercial rates have seen a 2% increase, while those for general and export-oriented processing industries have been adjusted accordingly.
It is important to note that this is the second gas price hike under the caretaker administration; the last increase was as high as 1100%.
Last year, the IMF approved a nine-month Stand-By Arrangement (SBA) with Pakistan, providing $3 billion to support the country’s economic stabilization program, of which $1.9 billion has been received.
The IMF highlighted severe liquidity issues in the power sector, including arrears accumulation and frequent power outages, which were significant factors during eight months of negotiations preceding a $3 billion bailout package.
