Islamabad:
The Government increased on Friday the fixed charges in gas invoices by 50% and also increased gas tariffs for non -residential consumers, but differ a decision on the import of up to 500,000 metric tons of sugar due to a disagreement about large subsidies.
The Economic Coordination Committee (ECC) of the Cabinet, which made the decisions, also approved RS2.6 billion in complementary subsidies for payments of national and foreign debts in the current fiscal year, which ended on Monday.
The ECC meeting, which was held only three days before the start of the new fiscal year, underlines the challenges that the Ministry of Finance will continue to face in the new fiscal year 2025-26 due to the competitive demands of unclean subsidies.
“The ECC proposed adjustments in the fees of the energy sector and decided to maintain gas prices to protect household consumers with only fixed positions readjusted in the national sector to recover the costs of the assets,” according to a statement issued by the Ministry of Finance after the ECC meeting.
He added that the ECC allowed the price of gas for bulk consumers, the power plants that operate with natural gas and the industry increase by an average value of around 10%.
However, when the ECC did not change gasoline prices for residential consumers, it significantly increased the fixed positions of residential consumers by 50%. For the protected category of national consumers, fixed charges increased by RS200 to RS600.
In the non -protected category, for monthly consumption of up to 1.5 hm3, fixed charges increased from RS1,000 to RS1,500. Similarly, fixed charges for the consumption of more than 2 HM3 increased from RS2,000 to RS3,000.
Prices were changed to meet a condition of the International Monetary Fund to biannually adjust gas prices.
The Petroleum and Gas Regulatory Authority last month determined the estimated income requirements (err) for fiscal year 2025-26 for SNGPL and SSGCL. According to the determinations, SNGPL requires income from RS534.5 billion and SSGCL requires income from RS354.2 billion to navigate through fiscal year 2025-26 respectively. The cumulative income requirements of both SUI companies are RS888.6 billion for fiscal year 2025-26.
The law requires the Federal Government to ensure that consumer gas sales prices are not lower than the income requirement determined by the authority. At current consumer gas sales prices, as of February 1, February 1, 2025, the estimated income of both Sui companies by the end of fiscal year 2015-26 are RS847.714 billion.
ECC approved to increase gas prices for bulk consumers by 9% to RS3160 by MMBTU. Increased rates for electrical plants by 17% to RS1230 and 7% for industrial gas connections to RS2300 by MMBTU.
Some of the ECC members criticized, managing 24% return of assets to Sui companies, which discourages efforts to improve efficiency by reducing line losses.
Import of sugar
The ECC could not make a decision on a proposal of up to 500,000 imports of sugar to satisfy the local shortage in the future, caused by the export of 765,000 metric tons of sugar by the government of Prime Minister Shehbaz Sharif.
It was told to ECC that, including all taxes and tariffs, imported sugar would cost RS245 per kg, which is even higher than the local price of RS190. An ECC member said that the Government has to grant RS85 per kg of subsidy, which would require a supplementary subsidy of 42.5 billion rupees in the next fiscal year.
However, during the meeting, Secretary Finance said it would not provide subsidies or seek the IMF permission to allow such subsidies or renounce taxes and tariffs in the import stage. No taxes and taxes, the import price in the port is from RS153 per kg.
The LED Committee of the Vice Prime Minister Ishaq Dar has determined the need for the importation of 750,000 metric tons of sugar due to early scarcity in October and onwards. ECC members urged to release the sugar market and maintain strategic reserves of approximately 500,000 metric tons.
An official brochure of the Ministry of Finance declared that the ECC considered a proposal presented 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 Constitution of a 10 -members Steering Committee led by the Federal Minister of MNFSR and including Federal Commerce Minister SAPM to the Ministry of Foreign Affairs, the Secretary’s Finance Division, President FBR and others to return to ECC with his recommendations on the matter, he added.
Banks subsidies
The Ministry of Finance declared that the ECC also discussed a summary of the Finance Division regarding the changes in the remittance incentive schemes in the home. He said that the ECC commissioned that the State Bank of Pakistan and the Finance Division propose and present an adequate plan before July 31 to ECC, ensuring the impact analysis and a road map for a duly managed transition.
ECC was informed that banks have demanded claims of RS200 billion due to subsidies under Pakistan remittance initiatives. The Ministry of Finance has already discontinued the subsidy for the next fiscal year. The representative of the Central Bank told ECC that the SBP cannot give any subsidy due to the restrictions imposed by the IMF.
Some of the ECC members opposed to RS6 for subsidy to the dollar, which did not benefit the senders and, instead, the money went in the pockets of commercial banks and exchange companies. Instead, they urged to facilitate the manufacturing sector.
Other decisions
The ECC approved another complementary subsidy of RS15.8 billion so that the Ministry of Defense covers the deficit in salaries and admissible assignments, in expenses related to employees and non-employees related to employees and clarify the pending quotas as part of the package of the Prime Minister for the Mártires of the recent War of India Pak-ADIA. Approved another complementary subsidy of RS5.5 billion for divisions of strategic plans such as rupee coverage for the Pakistan Space and Upper Atmosphere Commission (Supparco) during CFY 2024-25.
The Cabinet agency also considered a summary of the Finance Division for the launch of a risk coverage scheme for small farmers and little served areas, and was granted approval in the principal to the proposal with instructions for greater adjustment and incorporation in the additional safeguards before its launch planned on August 14, 2025.
It was told to ECC that the scheme would probably bring to 750,000 new agricultural borrowers to the formal financial system and generate an incremental credit portfolio of RS300 billion during its 3 -year disbursement of disbursement since 26 of the years in the fiscal year.
