A week after the last election, the caretaker government was busy taking the decisions that the new government would prefer not to take itself. The latest decision was said to be the gas tariff hike which first went to the Economic Coordination Committee of the Cabinet, which had approved the hike on Wednesday, leaving the Cabinet to okay it on Thursday. The Cabinet had initially considered the hike earlier, but had referred it to the ECC because several ministers did not approve. However, the step has been taken to meet one of the conditionalities of the IMF Standby Arrangement, with its final tranche of $1.2 billion, to be disbursed after the March review, not to be disbursed.
The increase, which will affect residential consumers the most, was strongly opposed by Industry Minister Gohar Ejaz, who fought the corner of the textile industry, because the proposal included a substantial increase in the price of gas supplied to captive power plants. Another industry which felt itself targeted by the increases was urea manufacture, especially Engro. It should be noted that only recently, the government has ended the subsidy to imported urea, meaning that farmers now pay the full cost, because of a price hike in the official sale price. Because locally manufactured urea will now receive a more expensive feedstock, more price increases are on the cards. Therefore, the country’s food supply will cost more, because farmers might stint on other, phosphatic, fertilizers, but regard urea as a must. The food produced is basically for local consumption, but increasing the cost of captive power plants will have an adverse impact on exports. CPPs were thought a neat solution to the textile industry’s power crisis, in which they not only produced as much electricity as they could consume, but sold any excess to the DISCOs. However, CPPs are mostly re-installations of older technology, and thus relatively inefficient.
One disadvantage of the new tariffs are that it seems they will unnecessarily burden the new government as it comes in. It might be remembered that the PDM government complained loudly and prolongedly of being sabotaged by its PTI predecessor which left it to take unpopular decisions in raising fuel and utility prices . It almost seems as if the caretakers are preparing the ground for the PDM 2.0 to blame them for tying its hands.
