Gas Prices Could Surge Massively In Coming Weeks
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To ensure the release of a $700 million tranche during the upcoming review by the International Monetary Fund (IMF) under the existing $3 billion standby loan agreement, the interim government has taken several measures, including a proposal to raise gas tariffs for various sectors by as much as 193% within the next month, according to a report by Express News.
This proposal is expected to be presented in the forthcoming Economic Coordination Committee (ECC) meeting scheduled for Monday. As per sources, the proposal from the Petroleum Division outlines a significant 193% increase in gas tariffs and a 172% hike in gas prices for domestic consumers. It also suggests a 193% increase in gas prices for other consumer categories and a substantial adjustment in fixed monthly charges for protected consumers, which would increase from Rs10 to Rs400.
Furthermore, the proposal recommends increasing the gas tariff for the CNG sector to Rs4,400 per MMBTU. However, it has been suggested that gas prices for power plants and commercial bread-makers will remain unchanged.
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Despite facing some challenges and missed targets in implementing promised reforms, Pakistan is on course to secure the IMF’s first economic review under the $3 billion loan program in November. This paves the way for the release of the second $700 million tranche. A recent report from Topline Research underscores the likelihood of receiving the next IMF tranche, as waivers may be granted for missed targets and benchmarks if the overall program remains viable.
In June 2023, Pakistan obtained a nine-month Stand-By Arrangement (SBA) from the IMF worth $3 billion, a notable achievement after the failure to revive the previous $6 billion program. This new SBA exceeded expectations in terms of both its duration and size.
