PM declines to approve gas tariff hike

Islamabad: Prime Minister Nawaz Sharif and his cabinet colleagues are divided over a proposed substantial increase in gas tariff from next month under an agreement with the International Monetary Fund (IMF).

Petroleum Minister Shahid Khaqan Abbasi announced last week that the prices for all consumers, except domestic users, would be increased.

According to an official, the government’s economic team led by Finance Minister Ishaq Dar presented last week the proposal to the prime minister but he declined to approve it. The prime minister strongly opposed the proposal.

The prime minister is reported to have said that the government was already facing severe criticism over the general price hike, particularly of electricity, and it would not be advisable to increase gas tariff when its supply to most of the consumers was being reduced because of shortage.

The textile sector particularly wanted continuation of maximum gas supplies even in the winter, instead of a price shock.

The sources said the prime minister had also received reports that the CNG sector was already planning a protest campaign which could be joined not only by people losing jobs in the sector but also by opposition parties, particularly the PTI.

The government has two weeks to take a final decision and the economic team may continue to try to persuade the prime minister to meet the commitment made to the IMF.

The ministry of finance had given an undertaking to the IMF as part of the $6.64 billion Extended Fund Facility to generate about Rs100 billion from gas prices through imposition of a rates.