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Consumers to pay for losses of gas companies as govt ends subsidy

SAMAA | - Posted: Sep 17, 2018 | Last Updated: 2 years ago
SAMAA |
Posted: Sep 17, 2018 | Last Updated: 2 years ago
Consumers to pay for losses of gas companies as govt ends subsidy

Previously, domestic users were paying between Rs110 and Rs220 for consuming up to 300 units of gas, while those exceeding this limit had to pay Rs600 (this does not include sales tax and other charges).

Making food at home as well as refilling your car’s CNG tank is going to cost you more because the Economic Coordination Committee of the federal cabinet has approved an increase in gas prices on Monday.

Previously, domestic users were paying between Rs110 and Rs220 for consuming up to 300 units of gas, while those exceeding this limit had to pay Rs600 (this does not include sales tax and other charges).

Under the new proposal, the rates will increase by 10% for up to 50 units and 143% for more than 400 units.

This means that if you consumed 216 cubic meters of gas in a month, your gas charges would have been Rs1,796, based on the previous rate of Rs220 per unit (this does not include sales tax and other charges).

Consuming the same number of units will now cost you more because the new rate will be Rs275 per unit.

Similarly, the CNG-powered automobiles will have to pay more for refills because the rate for CNG has increased by 40% from Rs700 (per one million British Thermal Units) to Rs980.

The increase in gas prices will help the government increase its revenue and curtail losses in government-owned gas companies — Sui Southern Gas Company and Sui Northern Gas Pipelines Limited. The two companies book a total of Rs156 billion loss per year.

An alternate option would have been to provide subsidies to these companies, but the government is under pressure to reduce debt and does not have enough funds to subsidize such losses.

Therefore, it decided to pass it on to consumers by raising prices.

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