Islamabad, 18 February 2023 (GNP): Economists are apprehensive that the federal government’s move to raise gas prices to appease the IMF will favor the exploration and production sector but harm the steel, chemical, and textile industries while also leading to a rise in the inflation rate.
As stated in the analysis by Arif Habib Limited (AHL), if the government approves an increase in gas prices in accordance with the IMF’s advice, the weighted average cost of gas will rise by 43%, from Rs, 620/mmbtu to Rs, 885/mmbtu. According to Taurus Research, gas prices may soar by much as 112%.
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Nonetheless, Fauji Fertilizer Bin Qasim (FFBL) anticipates paying more for its feedstock needs while using diammonium phosphate (DAP). This tariff will primarily impact non-protected residential consumers, commercial, cement, export, and non-export sectors. The first step in the process of rationalizing gas prices to stop the flow of circular debt will involve applying a new gas tariff starting on January 1, 2023. The price increases are anticipated to be fully passed on by the fertilizer companies, which will raise the price of urea. Due to EFERT’s higher margins than its competitors, Rs1.9 will be added to its earnings per share (EPS) for the calendar year 2023.
According to Arif Habib Bank Ltd: “The IMF wants to prevent any further addition to the circular debt of the gas sector, and this price increase will ensure that the current half-year shortfall is eliminated.”
Certain retail gas consumers will be protected under the new system, but all other gas consumers will see an increase in pricing.
