The recent surge in gas prices, marked by a staggering 194% hike in natural gas prices, has propelled Pakistan’s annual short-term inflation to a startling 40%, a figure not seen in over four months. This drastic increase, coupled with unprecedented spikes in fixed monthly gas charges, has ignited concerns about the economic well-being of both consumers and industries.
The 41.9% inflation reading for the week ending Nov 16, attributed mainly to a remarkable 1,100% increase in gas charges compared to the previous year, reflects the magnitude of the issue. The Pakistan Industrial and Traders Associations Front (PIAF) foresees a potential 25% rise in the average Consumer Price Index for FY24 due to the gas price hike, intensifying the existing inflationary pressures.
The timing of the gas tariff hike, just before the first IMF review under the $3 billion short-term loan program, raises eyebrows. This move, the second increase in gas prices within 10 months, prompts speculation about the motives behind such a decision. The economic backdrop suggests three potential reasons: filling fiscal gaps through taxation on gas, addressing inefficiencies and guaranteed returns on assets for public-sector distribution companies, and complying with conditions tied to the loan program.
Industries pivotal to the economy, such as fertilizers, cement, and steel, are anticipated to pass on the increased costs to consumers, amplifying the impact on agricultural production and construction material prices. The burden on domestic gas consumers is palpable, not only in the form of inflated bills but also due to a tangible reduction in gas pressure, making basic tasks like cooking and heating water nearly impossible.
The gas supply crisis, exacerbated by low pressure even before the onset of winter, underscores the urgent need for the government’s attention. The populace’s right to access basic facilities for a decent standard of living must be prioritized. As citizens grapple with both economic challenges and the practical difficulties posed by the gas crisis, swift and comprehensive measures are imperative to address these pressing issues. The government must acknowledge the plight of its citizens, ensuring that their needs are promptly met to alleviate the growing burden on households across the nation.
