Islamabad:
Friday, the government increased fixed costs on gas bills by 50% and also increased gas prices for non -residential consumers, but reported a decision on the importation of up to 500,000 tonnes of sugar due to a disagreement on huge subsidies.
The firm’s economic coordinating committee (ECC), which has made decisions, also approved 2.6 billions of additional grant rupees for reimbursements for national and foreign debts during the current financial year, ending on Monday.
The meeting of the ECC, which was held only three days before the start of the new financial year, underlines the challenges that the Ministry of Finance will continue during the new financial year 2025-26 due to competing requests for unarmed subsidies.
“The ECC has proposed adjustments of the energy sector prices and has decided to maintain gas prices to protect household consumers with only fixed costs readjusted in the internal sector to recover asset costs”, according to a press release published by the Ministry of Finance after the ECC meeting.
He added that ECC has enabled the price of bulk consumer gas, power plants operating on natural gas and the industry increases by an average value of around 10%.
However, when ECC has not changed gas prices for residential consumers, it has considerably increased fixed charges on residential consumers by 50%. For the protected category of national consumers, fixed charges have been increased from RS200 to Rs600.
In the unprotected category, for a monthly consumption of up to 1.5 hm3, the fixed charges went from RS1,000 to Rs1,500. Likewise, the fixed costs for consumption of more than 2 hm3s have increased from RS2,000 to Rs3,000.
The prices have been modified to meet a condition of the International Monetary Fund to adjust the price of gas.
The oil and gas regulatory authority last month determined the estimated income requirements (ERR) for the year 2025-26 for SNGPL and SSGCL. Depending on the determinations, the SNGPL requires revenues from RS534.5 billion and the SSGCL requires revenues from RS354.2 billion to navigate respectively in the 2025-26 financial year. The cumulative income requirements of the two SUP companies are 888.6 billion rupees for the year 2025-26.
The law obliges the federal government to ensure that consumer gas selling prices should not be lower than the income requirement determined by the authority. At current consumption gas selling prices notified from February 01, 2025, the estimated income of the two SUP companies at the end of the 2025-26 fiscal year are 847.714 billion rupees.
ECC has approved to increase gas prices for bulk consumers from 9% to RS3160 per MMBTU. It increased the prices of power plants from 17% to RS1230 and 7% for industrial gas connections to RS2300 by MMBTU.
Some of the members of the ECC criticized by giving a guarantee of asset yield of 24% to the SUP companies, which discourages efforts to improve efficiency by reducing line losses.
Import of sugar
The ECC could not make a decision on a proposal for 500,000 imports of sugar to respond to the local shortage in the future, caused by the export of 765,000 metric tonnes of sugar by the government of Prime Minister Shehbaz Sharif.
The ECC has been informed that, including all taxes and rights, imported sugar would cost RS245 per kg, which is even higher than the local price of RS190. A member of the ECC said that the government should grant RS85 by subsidy, which would require an additional subsidy of 42.5 billion rupees in the next financial year.
However, at the meeting, the Secretary Finance declared that he would not provide subsidies or that he would request the authorization of the IMF for having authorized such subsidies or renounce taxes and rights at the import stadium. Without right and taxes, the import price of the port is RS153 per kg.
Darrier ISHAQ DAR TROGRAPHER has determined the need for an import of 750,000 tonnes of sugar due to shortages scheduled for October and from. ECC members have urged to release the sugar market and maintain only strategic reserves of around 500,000 metric tonnes.
An official document from the Ministry of Finance said that the ECC had envisaged a proposal caused by the Ministry of National Food Security and Research for the import of sugar to stabilize sugar prices.
The ECC approved the proposal of the Ministry of the Constitution of a steering committee of 10 members led by the Federal Minister of MNFSR and including the Federal Minister of Commerce, SAPM at the Ministry of Foreign Affairs, Secretary Finance Division, President FBR and others to return to the ECC with their recommendations on the issue, he added.
Banque subsidies
The Ministry of Finance said that the ECC had also discussed a summary of the finance division concerning changes in the incentive programs of funds. He said that the ECC had in charge of the Pakistan State Bank and the Finance Division to offer and present an appropriate plan by July 31 at the ECC, ensuring an impact analysis and a roadmap for a properly managed transition.
The ECC was informed that banks asked 200 billion complaints due to the subsidies under the initiatives of Pakistani funds. The Ministry of Finance has already interrupted the subsidy for the next financial year. The representative of the Central Bank told the ECC that the SBP could not give any subsidy due to the restrictions imposed by the IMF.
Some members of the ECC have opposed the strengthening of RS6 by dollar, which did not benefit lifes and that money went in the pockets of commercial banks and exchange companies. Rather, they exhorted to facilitate the manufacturing sector.
Other decisions
The ECC approved another additional subsidy of 15.8 billion rupees for the Ministry of Defense in order to cover the deficit of salary and eligible allowances, in expenses related to employees and not linked to employees and to erase exceptional contributions within the framework of the PM package for martyrs of the recent Pak-India war. It approved another additional subsidy of 5.5 billion rupees for the divisions of strategic plans such as rupee coverage for the Pakistan Space & Upper Atmosphere (Suparco) research commission during the CFY 2024-25.
The organization of the firm also examined a summary of the financial division for the launch of a risk coverage program for small farmers and sub-services zones, and granted approval of the principle to the proposal with instructions for fine adjustment and incorporating additional guarantees before its launch scheduled for August 14, 2025.
The ECC has been informed that the program would probably bring 750,000 new agricultural borrowers in the formal financial system and generate an additional credit portfolio of 300 billion rupees during its 3 -year disbursement mandate, from 26 to 28 years. The budgetary obligation to respond to risk coverage and the operational cost of banks is estimated at RS37.5 billion, spread over five years.
