ISLAMABAD: The people of Pakistan will be hit by an inflation drone on July 1st, with the government planning to impose a massive gas tariff hike of 15-100%, affecting all categories of consumers on the first day of the new fiscal year 2011-12. The textile sector, however, is expected to be spared the rod in the long run. According to sources in the Ministry of Petroleum and Natural Resources, the economic coordination committee meeting, scheduled for today (Thursday), will approve the increase in gas tariff by 15 percent for domestic consumers and 100 percent for the fertiliser industry. The gas tariff for commercial consumers will also be increased by 15 percent, which will be higher than the tariff for the industrial and power sector. Sources said the textile sector would be treated as a special category and in future a special tariff will be extended to this sector, which has played a pivotal role in promoting exports. But while textile may have it good, the same will not be the case for CNG users. “The CNG gas price which currently stands at 45 percent of the petrol price will be jacked up to 65 percent of the petrol price,” the source said. The gas tariff for the power sector and the general industrial sector (textile industry), other than fertilisers, will be the same. “Earlier, the power sector had three kinds of tariff and the industrial sector had one tariff, but now it would be a uniform tariff for both sectors”, the source said. When contacted, Dr Asim Hussain, Federal Minister for Petroleum and Natural Resources confirmed that the government is going to increase the gas tariff under the gas tariff rationalisation mechanism. However, he said that it depends upon the approval of the ECC. He added that the implementation of the decision hinged upon the decision of the case about raise in gas tariff submitted with the Lahore High Court. (LHC). “We will have to assess the legal implications also while implementing the decision in case ECC approves the gas tariff rationalisation plan firmed up by the Ministry of Petroleum and natural Resources”, he said. Commenting on the price hike for fertiliser units, a senior functionary of the ministry, speaking off the record, pointed out that currently there were two kinds of tariffs for the fertiliser sector, which were Rs50 per MMBTU and Rs100 per MMBTU. According to one agriculture expert, the increase in gas tariff for the fertilizer sector will have an adverse impact on the price of urea, the basic input for crops meaning thereby that the prices of agriculture produce will go up, leading to an increase in food inflation across the country. Ministry insiders say gas tariffs are being rationalised to ensure the sensible use of gas and to avoid wastage of gas in non-productive sector, as gas production has decreased in the country by 4 to 5 percent and people have had to brave the biggest ever gas deficit of 1.5 billion cubic feet gas per day in the month of January. This is the first year in Pakistan’s history that even in the summer season industrial, power and CNG sectors are facing gas shortage. For domestic consumers, the Oil and Gas Regulatory Authority (Ogra), has already increased the gas tariff by 1.52 percent and 2.36 percent for end consumers of Sui Southern and Sui Northern respectively. However, according to Ijaz Chauhdry, Secretary Petroleum, the said increase in tariff by Ogra will be absorbed by the profit of the two gas utilities, which effectively means that there will be no real term tariff hike for these consumers.

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