There has been a relentless and consistent hike in energy prices for the past few months with both electricity and gas becoming increasingly unaffordable for consumers and businesses alike. The latest proposal by the country’s two gas firms, SNGPL and SSGC, for a 220% increase in the prescribed gas prices to meet expected revenue targets will deal a crippling blow not only to the common man, already unable to make ends meet at current price levels, but also lower middle class gas consumers with relatively higher disposable incomes. Although it is unlikely that such an exorbitant increase in gas prices will be approved by the regulator Ogra, per unit price of gas will still surely go up, as it has for consecutive months. Both SNGPL and SSGC are severely inefficient publically owned and run companies, which is why they face a perpetual revenue shortfall problem. No meaningful tangible changes have been introduced in the structure and running of these units for decades, which results in targets being missed leading to consumers being charged obscene gas prices to make up the difference.
Last week while chairing a meeting to discuss the prices of essential food items that have been steadily rising, Prime Minister Imran Khan had directed relevant officials not to increase gas prices for the next few months. This has now become an unrealistic and near impossible policy to implement and maintain owing to the pressure of the IMF. After being stalled for almost a year pending fulfillment of around half a dozen conditions by the PTI government, it seems that the fund is satisfied with the progress made and the EFF will resume this month. Jacking up energy prices is one of those key conditions that the PTI has met, something that it had avoided until it could no longer put it off. Simultaneously, the IMF also wants subsidies to state-owned enterprises to be rationalized, which is why the only way to supplement revenue target shortfalls is by getting the consumer to pay more for gas and electricity. With Ramzan around the corner and food prices already on the rise, another energy price shock is the last thing an already financially burdened population needs.
