While the people were still in their half way to celebrate
reduction in oil prices, the increase in gas prices dampened their happiness
that due to concerns for consequent increase in electric and transportation
charges as the two sectors are the major consumers of natural gas in the
People generally feel that on one hand the government has
given relief by reducing the oil prices while in a sense it has been withdrawn
in the shape of increase in gas prices.
The government has announced an increase in the prices of
natural gas ranging from 14.39 to 37.39 per cent for domestic, commercial and
Taking a serious note of the step, the business community has
urged the Chief Executive Gen. Pervez Musharraf to intervene in the gas price
Zubair Motiwala, President of Karachi Chamber of Commerce and
Industry (KCCI) has urged the Chief Executive to revert the decision of gas
price increase in the best interest of the national economy.
The business community has felt the pinch of the increase in
gas prices so harsh that they have asked the government to take remedial
measures within 48 hours. They said that if the concerned authorities fail to
respond to the call of the business community they would be forced to call a
general body meeting not only of the KCCI but also of all other representative
trade bodies to chalk out future course of action. The higher gas and oil prices
have already led to increase in production cost leaving our productions highly
incompetitive in the export market. The ever-increasing cost of production have
already taken the prices of the manufacturing sector out of the reach of
domestic consumers, they feel. The prices of oil, gas and electricity, which are
the basic ingredients for any industry have to be brought down to a reasonable
level to allow the industry to survive, they said. They said that gas prices had
been increased by over 50 per cent in the last 18 months. They said that this
last increase in gas would adversely affect the performance of the
export-oriented industry. The end result of the increase in gas prices would be
a steep decline in our exports already struggling to meet the target of $10
billion set by the government.
The government claims that 40 per cent of domestic consumers
would not be affected from the increase as they consume less than 100 cubic
meters per month. Natural gas is being supplied to about 3.2 million domestic
consumers. No increase has been made in the prices of gas being used for feed
stock by the fertilizer industry.
It may be mentioned that gas tariff is being increased by the
government every six months to bring its prices at par with the international
level which are normally linked with the crude oil rates. The government, which
is giving subsidies of Rs1 billion to domestic consumers and Rs11 billion to
fertilizer industry using natural gas, a feed stock, is working on a plan to
Consumer gas prices during the last 18 months have registered
36 to 50 per cent increases. The first increase inclusive of 15 per cent general
sales tax came in August 1999, ranging from 21 per cent to 34 per cent for
various consumer groups. This was followed by 15 per cent increase in July 2000.
The domestic consumers in highest consumption slab will be
the hardest hit by the increase, which had been on the cards for the last three
The decision will generate additional Rs15 billion revenue in
the shape of gas development surcharge as agreed with the IMF.
The latest increase in gas prices, which comes into effect
immediately, has raised the fears of an upward revision in the prices of
Country's power sector is the largest gas consumer with 31
per cent share followed by fertilizer sector with 25 per cent, household with 21
per cent, industry 20 per cent and commercial sector with around 40 per cent
WAPDA has already moved the National Electric Power
Regulatory Authority (NEPRA) for 98 paisa per unit increase on the ground that
it had to increase its thermal power production this year as hydel power
suffered due to shortage of water in the dams.
Domestic consumers of 100 cubic meters, the lowest slab of
consumption, will not experience any increase. The second slab of 100 to 200
cubic meters per month will experience 18.33 per cent increase. Those using 200
to 300 cubic meters of gas per month will be paying 27.99 per cent more while
whose consuming 300 to 400 cubic meters of gas will be paying 28.94 per cent
more per month. The next slab going beyond 400 cubic meters per month will be
the hardest hit and paying 37.39 per cent more.
The commercial, industrial and power sector consumers will
experience 14.40 per cent increase, similarly, those who have converted their
vehicles on CNG will have to pay 14.40 per cent more.