Govt Might Withdraw Gas Subsidy for Industrial Consumers

The government is considering withdrawing the subsidized gas rates of $6.5 per unit for the industrial sector, reported Dawn News. According to the report, the government is considering withdrawing the subsidized rates because of the supply shortages and unsustainable average cost of gas. This decision to put a halt to the subsidized rates is a part of the three-phased tariff rationalization plan. The cabinet has already received a summary of ending subsidized gas supply to the industrial sector, including captive power plants from the Ministry of Energy (Petroleum Division), a government official told Dawn. The cabinet is set to take a decision regarding the matter on Tuesday. The report stated that the average prescribed price of local gas is set at about Rs. 645 per unit, whereas the delivered cost of LNG Cargoes has exceeded Rs. 5,000 per unit. During the previous month, the average LNG price was recorded at Rs. 2,730 per unit. Moreover, domestic gas supply to the export industry and the power plants under the export industry is at Rs. 820-852 per unit. Whereas general industry, ice factories, and CNG sector are supplied gas at Rs. 1,055, Rs. 1,050, and Rs. 1,370 per unit, respectively. The new rates for the supply of gas will be finalized on Tuesday during the meeting. Furthermore, it is expected that during the second and the third phase of the plan, the rates for residential consumers will also be increased. Through these phases, the government is trying to place an elaborate weighted average cost of the gas system, which will involve the local and the imported gases. Currently, the gas shortage is being felt across the country as the gas shortage in the network exceeds 400-500 million cubic feet per day.