Following Prime Minister Shahbaz Sharif’s intervention, the government has restored 50 percent of gas supplies to Pakistan’s export sector following a one-week shutdown from July 1-8. However, the Cabinet’s Economic Coordination Committee (ECC) hiked the price of imported and domestic gas for the export industry by more than 38 percent and 82 percent, respectively, on Monday, and protected power prices at 9 cents per unit for 11 months beginning August 1.
The export-oriented sector’s gas per mmBtu rate has been increased by Rs530 and is now fixed at Rs1,350 per mmBtu, up from Rs820.
The rate for general industry has been increased from Rs850 per mmBtu and now has been fixed at Rs1,550 per mmBtu.
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This will be primarily applicable in Sindh where the current prices for export and general industry are Rs820 and Rs853, respectively, representing an increase of nearly 65pc and 82pc.
RLNG is now supplied for $6.5 per mmBtu to five export sectors: jute, leather, carpet, surgical, and sports goods. Thus, the increase is around 38.5 percent. The government budget 2022-23 includes a Rs40 billion subsidy cover for RLNG, which would be evaluated quarterly.
Earlier, Prime Minister Shahbaz Sharif presided over a meeting that concluded the argument for fixed energy prices for the export industry. It has been accepted at the policy level that regionally competitive rates have proved to be encouraging for the export sector to achieve a historically high level of $32 billion in 2021-22, representing a nearly 26 percent increase over 2020-21, resulting in the continuation of fixed rates for the current year and regionally competitive rates throughout the 2020-25 Textile & Apparel Policy to sustain the export momentum.
Rana Ahsan Afzal, a spokesperson for the Finance Ministry, defended the latest rise, saying that rising power and gas rates for the industrial sector were unavoidable. He also stated that the government is still offering gas at a reduced rate to export-oriented sectors.
According to the spokesperson, the government has allocated Rs40 billion for export-oriented sectors for competing in the international market.