Government expected to address gas prices soon

September 20, 2023 (MLN): The gas price hike in Pakistan has become a significant point of discussion in recent days, as the International Monetary Fund (IMF) review approaches.

Despite this impending review, the government has not yet disclosed any details regarding the gas price adjustments, which are essential to meet the IMF's conditions and address the escalating circular debt issues within the power sector.

On Thursday, September 14, Caretaker Prime Minister Anwaarul Haq Kakar stated during a televised interview that the Cabinet Division would soon unveil its decision on the matter.

Speculation and rumors about the delay in announcing the gas prices have been circulating in the media.

It is worth noting that there is still more than a week left in September, providing ample time for the government to make the announcement, Ali Najib, Senior Equity Trader at Topline Securities stated while talking to Mettis Link News.

He added that the gas prices will likely be announced before the end of September.

The prevailing expectation among experts is that gas prices will indeed see an increase. Ali Najib pointed out that the government's hands are tied when it comes to this decision, given the IMF's requirements.

To recall, Muhammad Ali, Caretaker Minister for Energy and Power stated that given the pressing concerns regarding the circular debt, it is deemed necessary to increase gas prices across the board as a vital step towards addressing the crisis, at the SIFC Apex Committee meeting held on September 08.

One possible reason for the delay in the announcement could be the government's desire to stagger price hikes, avoiding simultaneous increases in both petrol and gas prices to shield consumers from sudden economic burdens, Fahad Rauf, Head of Research at Ismail Iqbal Securities pointed while talking to Mettis Link News.

Notably, on September 16, the government raised petrol and High-Speed Diesel (HSD) prices by Rs26.02 and Rs17.34 per liter, respectively, bringing the cumulative increase in petrol prices to a significant Rs40.93 per liter for this month alone.

This marked the fourth consecutive monthly increase, following a notable revision in petrol prices in August.

With the country currently under a caretaker government, it is unlikely that the delay is politically motivated, thus an announcement is expected in the near future, Fahad Rauf added.

Pakistan is under an IMF program of a $3bn loan which was signed in June 2023.

While $1.2 billion has already been disbursed, the remaining amount is phased over the program's duration, subject to two quarterly reviews, with the next review in November 2023.

Copyright Mettis Link News