Gas subsidy proposed for exporters.

ISLAMABAD -- The government has proposed huge hidden gas subsidies of 44% for Pakistan's richest exporters in the upcoming price revision but would increase rates for domestic consumers up to 172%, underscoring the elite capture of diminishing resources.

The hidden subsidies are in violation of the commitments given to the International Monetary Fund (IMF) and against a decision of the last federal cabinet that wanted an end to the supply of cheap local gas to the self-generation power plants of industries, known as captive power plants.

Official documents of the Ministry of Energy revealed that some categories of domestic consumers and public transport would be paying a price higher than the imported gas price as a result of the upcoming pricing review.

The proposed rates for commercial users and cement manufacturing plants are double than the price for captive power plants.

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The richest exporters and the industrialists selling goods in the domestic market may get away with huge hidden subsidies.

Sources said that the government wanted to approve revised gas rates by virtually convening a meeting of the Economic Coordination Committee (ECC) last week. But the idea was shelved and now the meeting will be held after the return of Finance Minister Dr Shamshad Akhtar from China.

The price revision for all categories of gas consumers is essential to prevent the two gas distribution companies - Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) - from bankruptcy.

The gas sector circular debt has already peaked to Rs2.1 trillion and if prices are not increased another Rs395 billion will be added to the debt just on account of revenue shortfall and LNG supply at low rates in Punjab, according to the Ministry of Energy.

Sources said that the Ministry of Finance had opposed gas subsidy for captive power plants, calling it against a decision of the last cabinet and also commitments given to the IMF.

They said that the finance ministry was in favour of keeping prices for the self-generation industrial power plants at par with RLNG rates.

Ogra has determined total revenue requirements of Rs697 billion for SNGPL and SSGCL for this fiscal year. SNGPL's requirement is estimated at Rs358 billion while SSGCL's needs are assessed at Rs339 billion.

The last government was required to increase gas prices with effect from July but it postponed the decision due to political...