Tag: Gas prices

  • Petroleum minister confirms gas prices will remain unchanged, highlights falling inflation

    Petroleum minister confirms gas prices will remain unchanged, highlights falling inflation

    In a recent press conference, Minister for Petroleum Musadik Malik announced that the federal government has decided to keep gas tariffs unchanged. He confirmed that consumers will not experience any increase in gas prices.

    Malik highlighted that the government’s economic policies are beginning to yield positive results. He reported a substantial reduction in food inflation, which has decreased from 48 per cent to just 2 per cent.

    Overall inflation has also dropped significantly, falling from 38 per cent to 12 per cent, with a continued downward trend anticipated. Malik stated that all economic indicators suggest the country is moving towards greater stability.

    The minister emphasised that the government’s primary objectives are to alleviate poverty, control inflation, and create job opportunities for the youth. He revealed that Prime Minister allocated Rs600 billion in the current federal budget to support the underprivileged.

    Development projects are being prioritised, particularly in underserved areas, to generate local employment. Additionally, Rs50 billion has been earmarked to protect 86 per cent of electricity consumers for the upcoming three months.

    Malik reiterated the government’s commitment to providing further relief to the public by enhancing healthcare facilities, digitising the Federal Board of Revenue (FBR), and pursuing the privatisation of state-owned enterprises.

    Criticising the previous Pakistan Tehreek-e-Insaf (PTI) administration, Malik accused them of distributing $4 billion to the wealthiest individuals during their tenure. He also addressed the issue of terrorism, asserting that while the government is working to combat it, opposition parties are criticising these efforts.

    The minister expressed disappointment with the opposition’s approach, which he described as destructive and confrontational. He specifically criticised the Sunni Ittehad Council (SIC) for its negative campaign against state institutions and its focus on sit-ins without offering viable solutions.

    Furthermore, Malik accused PTI leaders of inconsistency, recalling that they previously claimed their government was overthrown by the US, yet they are now seeking assistance from the same country.

  • Weekly inflation falls by 1%, but year-on-year rates remain high

    Weekly inflation falls by 1%, but year-on-year rates remain high

    The weekly inflation measured by the Sensitive Price Indicator (SPI) recorded a decrease of 1 per cent for the combined consumption groups during the week ended on May 02, according to data released by the Pakistan Bureau of Statistics (PBS).

    This marks a significant shift as inflation pressures ease for the first time in weeks. The SPI for the current week stands at 316.95 points, down from the previous week’s 320.14 points.

    However, compared to the corresponding week of the previous year, the SPI is up by 24.37 per cent, reflecting the ongoing inflationary trend across various sectors.

    The SPI, calculated with a base year of 2015-16, encompasses 17 urban centers and 51 essential items across all expenditure groups. The index serves as a critical barometer of inflationary trends in Pakistan.

    For the lowest consumption group, earning up to Rs17,732, the SPI decreased by 1.09 per cent, settling at 306.26 points, down from last week’s 309.64 points.

    Similarly, the SPI for consumption groups in the ranges Rs17,732-22,888, Rs22,889-29,517, Rs29,518-44,175, and above Rs44,175 saw decreases of 1.12 per cent, 1.02 per cent, 1.04 per cent, and 0.95 per cent, respectively.

    This broad-based decline indicates a general easing of inflationary pressures across different income groups.

    Price variations across essential items

    Out of the 51 items evaluated by the SPI, the prices of 18 items decreased, 15 increased, and 18 remained stable during the week.

    Items showing decreased prices

    Key items that recorded a notable decrease in their average prices on a week-on-week basis include:

    – Tomatoes: 22.05 per cent decrease

    – Chicken: 8.03 per cent decrease

    – Onions: 7.71 per cent decrease

    – Wheat flour: 6.88 per cent decrease

    – Bananas: 5.25 per cent decrease

    – Diesel: 2.89 per cent decrease

    Items with increased prices

    In contrast, some items saw a rise in their prices. These include:

    – Potatoes: 6.06 per cent increase

    – Salt powder: 0.91 per cent increase

    – Garlic: 0.85 per cent increase

    – Powdered milk: 0.70 per cent increase

    Year-on-year trends

    While the week-on-week numbers showed a decline, the year-on-year comparison paints a more complex picture.

    Certain commodities experienced significant increases over the past year. Notable among them are:

    – Gas charges for Q1: 570 per cent increase

    – Onions: 145.15 per cent increase

    – Tomatoes: 79.43 per cent increase

    – Garlic: 72.46 per cent increase

    – Chilies powder: 71.96 per cent increase

    However, some items witnessed a decrease in average prices over the year, including:

    – Bananas: 37.76 per cent decrease

    – Wheat flour: 23.15 per cent decrease

    – Cooking oil (5 litre): 20.45 per cent decrease

    These figures suggest a dynamic landscape of price fluctuations, with some areas showing improvement while others continue to face inflationary pressures.

    The decrease in SPI for the current week offers a brief respite from the upward inflation trend, but with significant year-on-year increases in many commodities, vigilance remains crucial.

  • Political instability, IMF loan conditions threaten Pakistan’s economic growth

    Political instability, IMF loan conditions threaten Pakistan’s economic growth

    In January, Pakistan experienced a boost in economic activity, thanks to the financial aid provided by the International Monetary Fund (IMF), as reported by Bloomberg Economics Tracker.

    However, there are three key developments that may impact future economic conditions.

    Firstly, the aftermath of the inconclusive February 8 election has resulted in persistent political instability, presenting a potential obstacle to new investments.

    Secondly, there is a likelihood of more stringent conditions associated with additional IMF loans. Lastly, there is an increasing probability that the State Bank of Pakistan will delay rate cuts.

    Despite the challenges, January saw a positive trend with a 0.9 per cent increase in economic activity compared to December, breaking a four-month contraction streak.

    The injection of IMF loans and eased trade restrictions contributed to this improvement, enabling increased purchases of essential import supplies.

    Looking ahead, the unresolved election outcome may prolong political uncertainty, affecting potential investments.

    The recent hike in gas prices on February 15 will likely drive inflation higher, further reducing the chances of a March rate cut.

    Considering these developments, Bloomberg Economics is considering revising its growth outlook.

    While Bloomberg currently predicts 2.1 per cent GDP growth through June 2024 (up from a 0.2 per cent contraction in the previous fiscal year), the consensus estimate is 2.5 per cent, and the IMF forecasts 2 per cent.

    It’s essential to note that the Bloomberg Economics monthly tracker assesses inflation-adjusted indicators of activity.

  • Pakistan may enter fresh IMF loan programme, stricter conditions expected

    Pakistan may enter fresh IMF loan programme, stricter conditions expected

    In the wake of the completion of its current loan programme, Pakistan is poised to sign a new loan agreement with the International Monetary Fund (IMF), reports indicate. 

    The forthcoming Extended Fund Facility programme, anticipated to span three years, will see Islamabad share budget proposals for FY 2024–25 with the IMF. 

    Sources suggest that before finalising the agreement, Pakistan will provide assurances to the IMF regarding further increases in electricity and gas prices, as well as a commitment to reduce subsidies. 

    Finance ministry sources have disclosed that the conditions for the new loan programme are expected to be more stringent compared to the current Standby Agreement (SBA) programme. 

    Earlier discussions hinted at Pakistan securing another loan package from the IMF following the conclusion of the ongoing standby agreement. 

    The caretaker government has commenced consultations for the upcoming IMF programme, with talks expected to commence this month. 

    Officials from the finance ministry have indicated that the measures initiated by the caretaker government will be continued by the elected government in discussions with the IMF.

  • OGRA approves massive gas tariff hike for SNGPL, SSGC consumers

    OGRA approves massive gas tariff hike for SNGPL, SSGC consumers

    In a move to address the fiscal challenges faced by Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC), the Oil and Gas Regulatory Authority (OGRA) has granted approval for a noteworthy increase in gas tariffs.

    Effective January 1, 2024, consumers of SNGPL will experience a 35.13 per cent surge, while SSGC customers will witness an 8.57 per cent rise.

    This marks the second adjustment in gas prices within the current fiscal year, following a substantial 193 per cent increase announced by OGRA, effective November 1, 2023. The decision to implement these changes is aimed at bridging the Rs98 billion shortfall collectively faced by both gas companies.

    The interim government’s initial projections aimed to collect Rs980 billion, intending to cover the estimated revenue requirements of Rs700 billion for both SNGPL and SSGC.

    The recommended average increase in the prescribed gas price is set at 23 per cent, reaching Rs1,590 per mmbtu, compared to the previous average of Rs1,291 per mmbtu determined on June 2, 2023.

    Specifically, OGRA has outlined a 50 per cent increase (Rs415.11 per mmbtu) for SNGPL, elevating the gas price to Rs1,238.68 per mmbtu, effective July 1, 2023.

    Simultaneously, the gas price for SSGC has been raised by 45 per cent (Rs417.23 per mmbtu) to reach Rs1,350.68 per mmbtu.

    The decision to increase gas prices aligns with the interim government’s commitment to the International Monetary Fund (IMF), with an agreement to announce a raise in gas sale prices by February 18, 2024.

    However, the OGRA Ordinance stipulates that if the government remains unresponsive to OGRA’s notification within 40 days, the determined tariff by the regulator will be automatically enforced.

    The recent approval underscores the ongoing efforts to address financial challenges and ensure the sustainability of the gas sector in Pakistan.

  • State Bank of Pakistan maintains policy rate at 22% despite inflation concerns 

    State Bank of Pakistan maintains policy rate at 22% despite inflation concerns 

    The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) convened today to deliberate on the prevailing economic conditions and has resolved to maintain the policy rate at 22 per cent for the fourth consecutive meeting. 

    This decision aligns with market expectations, as a majority of market participants were in agreement regarding the rate remaining unchanged. 

    The Monetary Policy Statement issued by the central bank indicates that the decision takes into consideration the impact of the recent increase in gas prices on November’s inflation, which exceeded the MPC’s earlier projections.  

    The Committee acknowledged the potential implications of this on the inflation outlook while also noting offsetting factors such as the recent decline in international oil prices and the improved availability of agricultural produce. 

    Additionally, the Committee conducted an assessment indicating that the real interest rate remains positive over a 12-month forward-looking horizon and anticipates a downward trajectory for inflation. 

    Key developments since the October meeting were considered by the MPC. Firstly, the successful completion of the staff-level agreement for the first review under the IMF SBA programme, which is expected to unlock financial inflows and enhance the SBP’s foreign exchange serves, 

    Secondly, the quarterly GDP growth for Q1–FY24 met the MPC’s expectations for a moderate economic recovery. 

    Lastly, consumer and business confidence surveys reflected positive sentiment improvements. Lastly, core inflation persists at elevated levels, showing a gradual reduction. 

    Considering these developments, the Committee determined that the existing monetary policy stance is conducive to achieving the inflation target of 5-7 per cent by the end of FY25. 

    The Committee emphasised that this assessment is contingent on the sustained implementation of targeted fiscal consolidation and the timely realisation of planned external inflows. 

  • IMF recommends gas price hike, subsidy cuts for Pakistan

    IMF recommends gas price hike, subsidy cuts for Pakistan

    The International Monetary Fund (IMF) has reportedly urged Pakistan to address the growing concerns surrounding the power sector’s circular debt, which now stands at 4 per cent of the gross domestic product (GDP).

    Despite initial targets for debt reduction not being met, the IMF has not yet made a final decision on its recommendations.

    Sources suggest that the IMF is advocating for an additional hike in gas prices and a reduction in energy sector subsidies, aligning with its persistent calls for such measures.

    It’s noteworthy that no official decision has been reached on these proposals. Simultaneously, Pakistan and the IMF have collaborated on a comprehensive privatisation plan, focusing on state-owned entities (SOEs) that have incurred significant losses.

    This strategic move aims to address the financial challenges faced by these institutions. The Central Monitoring Unit will meticulously evaluate the extent of losses, with findings submitted to the IMF.

    A crucial aspect of the privatization plan involves transferring control of power distribution companies to the private sector. This shift is expected to mitigate losses and improve efficiency in the power sector, aligning with the IMF’s overarching demand for comprehensive reforms in the energy sector.

  • Govt implements major gas price hike to tackle circular debt crisis 

    Govt implements major gas price hike to tackle circular debt crisis 

    On Monday night, the interim government made a significant announcement that will have a profound impact on the nation’s economy.  

    The decision involved a substantial increase in gas prices, set to take effect on November 1st, 2023. 

    Under this new pricing structure, non-protected domestic consumers will experience a substantial surge in their gas tariffs.  

    Specifically, rates will surge by a staggering 173 per cent for this category of consumers. Commercial users will see their gas prices climb by 136.4 per cent, while those in the export and non-export industries will face increases of 91 per cent and 83 per cent, respectively. 

    Further elaborating on the specifics of these changes, the revised monthly charges for protected consumers have been elevated from a mere Rs10 to a more substantial Rs400. For non-protected consumers, the monthly charges have surged from Rs460 to Rs1000, and for higher consumption slabs, the charges have escalated to a maximum of Rs2000. 

    In terms of actual consumption, the price per mmbtu will vary depending on usage. Users consuming up to 0.25 cubic metres will be charged Rs121 per mmbtu.  

    Those using up to 0.5 cubic metres will pay Rs150 per mmbtu; users with a monthly consumption of 0.60 cubic metres will incur charges of Rs200 per mmbtu; and those utilising 0.9 cubic metres will see rates set at Rs250 per mmbtu.  

    The steepest increase is witnessed by individuals using 1 cubic metre of gas per month, as their charges have surged from Rs400 per mmbtu to Rs1,000 per mmbtu. Users with gas consumption up to 1.5 cubic metres, previously paying Rs600 per mmbtu, will now be required to pay Rs1,200 per mmbtu starting from November 1st. 

    The changes in gas pricing also extend to small commercial users, such as local tandoors, who will be paying Rs697 per mmbtu from the aforementioned date.  

    The power sector will experience a range of charges, with rates fluctuating between Rs1,050 and Rs3,890 per mmbtu, while the cement industry will be subject to a consistent rate of Rs4,400 per mmbtu. 

    As for the export industry, gas pricing has been set at Rs2,100 to Rs2,400 per mmbtu, while non-export industries will be required to pay between Rs2,200 and Rs2,500 per mmbtu. These significant adjustments have been made to alleviate the burden on the nation’s economy. 

    The Power Division, in an official statement, justified the increase in gas prices by referencing the recommendations of the Oil and Gas Regulatory Authority, which sought to prevent an additional burden of Rs400 billion on the already burgeoning circular debt.  

  • IMF-backed gas price hike in Pakistan aims to tackle rising circular debt

    IMF-backed gas price hike in Pakistan aims to tackle rising circular debt

    The Economic Coordination Committee (ECC) recently made a decision to raise gas prices, a move that financial experts at Topline Securities, a brokerage firm, believe is a crucial step in Pakistan’s efforts to reach an agreement with the International Monetary Fund (IMF). This agreement is set for review in November.

    The decision to increase gas prices is seen as a necessity due to the alarming escalation of gas circular debt, which has now reached a staggering Rs2.1 trillion.

    Unfortunately, this debt is increasing at a rate of Rs350–400 billion annually, as stated by the Energy Minister.

    The IMF has consistently advocated for reducing circular debt by raising gas tariffs, as it places a substantial burden on Pakistan’s fiscal accounts. We anticipate that this, in conjunction with the rationalisation of power tariffs, will pave the way for Pakistan to secure a staff-level agreement during the November review.

    Notably, the ECC approved the proposed tariff schedule submitted by the Ministry of Energy, which will come into effect on November 1, 2023, instead of the initially proposed date of October 1, 2023.

    According to the approved schedule, there will be an increase of up to 173 per cent for non-protected domestic consumers, 136 per cent for commercial consumers, 86 per cent for export, and 117 per cent for non-export industries.

    Looking ahead, Pakistani authorities are gearing up for discussions with the IMF during the upcoming review of the $3 billion loan programme scheduled for November.

    Analysts predict that the rise in gas tariffs will help to minimise the disparity in gas tariffs for Sui Southern Gas Company (SSGC) and Sui Northern Gas Company Limited (SNGPL), resulting in a positive impact on their cash flow.

    The combined revenues of both Sui companies, which totaled around Rs1.6 trillion, are expected to experience significant improvement following this gas price hike as the tariff differential narrows.

    Furthermore, the increase in gas prices will have a positive impact on exploration companies like the Oil & Gas Development Company (OGDC) and Pakistan Petroleum (PPL) as it aids in reducing gas circular debt.

  • Govt considers substantial gas tariff hike as energy concerns loom 

    Govt considers substantial gas tariff hike as energy concerns loom 

    Caretaker Minister for Energy, Muhammad Ali, addressed concerns about gas prices during a visit to the Lahore Chamber of Commerce and Industry (LCCI), accompanied by Caretaker Federal Minister for Commerce, Industries, and Production, Gohar Ejaz.

    He revealed that impending announcements would detail changes in gas prices, acknowledging that gas prices have consistently been a matter of concern. According to Dawn, the Oil and Gas Regulatory Authority (OGRA) had proposed a 45–50 per cent gas tariff increase earlier in the year to meet revenue requirements for gas utilities. However, the government has not yet made a formal decision. 

    Ali emphasised regional disparities in gas prices, with the North having higher prices than the South. He also discussed the challenges of inadequate long-term LNG contracts and efforts to combat electricity theft. He noted that while steps were being taken to reduce energy price disparities, an overnight reduction was impossible due to the country’s commitment to the IMF programme. 

    Commerce Minister Ejaz highlighted efforts to address issues related to Afghan Transit Trade (ATT) and its impact on the dollar rate. He pointed out that industry inputs, raw materials, and energy prices were vulnerable to international market fluctuations, affecting exports due to currency devaluation. However, recent measures have stabilised the exchange rate. 

    Read more: IMF urges Pakistan to increase taxation on the rich and ‘protect the poor’

    Ejaz also stressed that currency devaluation had hindered export growth and highlighted how disparities in gas supply and prices hampered development efforts nationwide. He called for unity and collaboration, emphasising that traders were vital assets for the country’s strength and prosperity. 

    Notably, the caretaker government had recently raised petrol and high-speed diesel prices, leading to widespread criticism and sporadic protests due to the significant price surge amid high inflation.