Despite the Oil and Gas Regulatory Authority’s proposal of a 10% reduction for the following fiscal year, the federal government will not provide gas price relief.
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However, in order to comply with International Monetary Fund (IMF) regulations, the cost of captive power plants (CPPs) will increase by Rs. 250 per mmBtu to Rs. 3000 per mmBtu. This action seeks to minimize circular debt by earning between Rs. 110 and Rs. 115 billion.
The Petroleum Division has instructed gas companies to use the additional money to address circular debt difficulties. The IMF has chastised CPPs for their low efficiency (30–35%) and recommended that they be connected to the national energy grid by January 1, 2025, bringing their gas pricing into line with RLNG rates.
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Prices for CPP gas will increase by Rs. 250 per mmBtu starting on July 1, 2024, and then by an additional Rs. 700 per mmBtu starting on January 1, 2025.
Prior to FY25, the Finance Ministry had not provided subsidies to the Petroleum Division when it requested budgetary funding to reduce circular debt. Instead, losses in the gas industry will be controlled by excess revenue from current gas prices.
Domestic gas users are not currently receiving any subsidies. Industrial and high-end residential users use an annual sum of Rs. 110 billion to subsidize protected and certain non-protected consumers. Gas pricing must be adjusted every two years per the IMF mandate to stop the development of additional circular debt.
