New increases in electricity and gasoline prices in Pakistan - Energy

It seems that the prices of electricity and gasoline in Pakistan are about to face an expected increase, in light of the attempt of the government headed by Shahbaz Sharif to meet the conditions of the International Monetary Fund; So you can get the rest of the loan tranches of up to 6 billion dollars.

The price hike war faced by the Pakistani energy sector did not include diesel prices, as it will continue to enjoy the cover of government support, while Islamabad is preparing to resume consultations with the International Monetary Fund, next Wednesday.

The government aimed to renew consultations again with the IMF to rescue the Pakistani rupee (the local currency) from its lowest level ever against the US dollar, by strengthening foreign reserves and supporting the economy.

Increase in electricity and petrol prices in Pakistan

At a time when the energy sector is witnessing a state of turmoil, which has intensified in recent months, the government has sought to meet the conditions of the International Monetary Fund to resume talks on disbursing the previously announced loan grant, by imposing new increases on electricity and gasoline prices in Pakistan.

Electricity and gasoline prices in Pakistan
Fuel pump in Pakistan – Photo courtesy of The Times of Islamabad

Regarding the rate of increases in electricity and gasoline prices in Pakistan, the government decided to increase electricity prices by the equivalent of 7.14 rupees/unit over the base price, under the extended financing facilities for the fund program estimated at up to 6 billion dollars.

The conditions of the IMF include raising fuel prices by raising gasoline prices.

While an official clarified that the real increase in electricity prices is Rs 4.79/unit, but after taking into account the fuel price differential system considerations, another increase of 2.35 rupees/unit is added, The Brent newspaper quoted the International News as saying.

(Pakistani rupee = 0.0052 US dollars)

Government options..no way

By increasing the prices of electricity and gasoline in Pakistan, the government seeks to reduce the cost of support allocated to them in the current year’s budget until the end of the fiscal year in June. In light of the current prices, the government costs a subsidy bill of 140 billion rupees.

The government needs to increase the fees imposed on gas – too – to ensure that Soi Northern and Soy Southern Gas overcome their liquidity crisis.

In addition to these financial burdens, the government needs up to 200 billion rupees to pay the allocations to gas companies and utilities, which raises its financial burden bill to 701 billion rupees.

With regard to fuel prices, expectations indicate that the cost of fuel subsidies will be recorded at approximately 118 billion rupees if oil prices in Pakistan remain at their current levels, before any increases in electricity and gasoline prices are made in Pakistan.

In light of the measures that the government must take to provide the financial allocations required to meet its obligations, a new challenge is emerging before it, which is that 30 million families fall under the “Banazir” income support program, which requires providing them with support mechanisms.

Rescue tracks

Increase in electricity and petrol prices in Pakistan
Electricity towers in Pakistan – Photo courtesy of Daily Pakistan

Islamabad is seeking to follow parallel paths that will allow it to get out of the bottleneck of the energy crisis, especially since the growth in demand for gas, electricity and gasoline in Pakistan coincides with the high cost of energy subsidy bills and the government’s need to pay huge dues.

The National Electricity Regulatory Authority in Pakistan “Nebra” had agreed earlier this month to amend electricity fees under the “fuel cost adjustment” system and to charge the consumer on electricity bills for the month of May.

Meanwhile, the government is expanding the provision of additional supplies of electricity through renewable sources, so as not to fall prey to supply shortages while it plans to increase electricity and gasoline prices in Pakistan.

The south Asian town is also seeking to overcome the crises of gas shortages and the high prices of liquefied gas imports, through shipments of spot contracts and tenders, especially as it meets a fifth of the demand for electricity.

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