May 20, 2024 (MLN): The International Monetary Fund (IMF) has asked for continued timely gas tariff determinations and notifications within their required 40-day window, while protecting vulnerable households, starting with the June 2024 semiannual adjustment.
The Fund said that these are critical to preventing further Circular Debt (CD) flow.
After some delays, the resumption of gas tariff adjustments in line with cost recovery has contributed to a modest decline in natural gas CD, to Rs2,083 billion (2% of GDP) as of January 2024.
Price adjustments should continue to move toward the full phasing out of captive power usage this year, with cheaper natural gas prioritized for the most efficient power plants, the IMF in the second and final review report stressed.
They should also include efforts to fully equalize gas prices for all fertilizer companies, it said.
The authorities signaled an intention to move toward fully implementing a weighted average cost of gas (WACOG) across Pakistan, which would introduce a uniform gas price while helping to ensure cost recovery.
