By WEB DESK: The International Monetary Fund (IMF) has emphasised the critical importance of promptly determining and notifying gas tariffs as a key measure to address the escalating gas circular debt while protecting vulnerable households.
In its latest report released on Friday, the IMF conducted its second and final review within the stand-by arrangement framework, underscoring the urgency of initiating gas tariff adjustments starting with the June 2024 semiannual adjustment.
The report noted a slight decrease in natural gas circular debt to Rs2,083 billion (equivalent to 2.0 per cent of GDP) as of January 2024. The decline was attributed to the resumption of gas tariff adjustments, albeit with some delay, aimed at achieving cost recovery objectives.
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The IMF recommended a continued trajectory towards eliminating captive power usage and prioritising cheaper natural gas for the most efficient power plants. It also proposed standardising gas prices for all fertilizer companies, aligning with plans to implement a weighted average cost of gas (WACOG) across Pakistan to ensure uniformity and facilitate cost recovery.
Acknowledging Pakistan’s recent 24 per cent gas tariff increase on February 15, the report highlighted its progressive rate structure, which protects residential consumers while enhancing and equalizing prices for fertilizer companies.
The report further commended Pakistan’s adherence to the Structural Benchmarks (SBs) concerning the notification of semiannual gas tariff adjustments.
Additionally, the report shed light on the increasing prominence of Regasified Liquefied Natural Gas (RLNG) within Pakistan’s gas mix, driven by dwindling natural gas supplies exacerbated by years of under-pricing. RLNG has been diverted to domestic users at subsidized rates, highlighting the complexities of the gas sector dynamics.
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