The International Monetary Fund (IMF) has once again urged the Pakistani government to delegate the authority of determining gas sale prices to the Oil and Gas Regulatory Authority (OGRA). This move, according to the IMF, would relieve the government from the contentious issue of tariff enforcement.
A senior government official emphasized that this step could help prevent further escalation of the circular debt in the gas sector, which has now surged to a staggering Rs. 290 billion. The IMF has repeatedly stressed the need for Pakistan to adopt a market-based approach to energy pricing to address the country’s financial challenges and ensure energy sector sustainability.
In addition to the tariff-setting delegation, the IMF reminded government officials of the impending deadline: by January 1st, the gas tariffs for power plants must align with those for RLNG-operated plants. This alignment is crucial for maintaining consistency in the energy sector’s pricing structure and avoiding discrepancies that could exacerbate financial imbalances.
The IMF’s recommendation aligns with a decision made by the Economic Coordination Committee (ECC) during the caretaker government’s tenure. This decision authorized OGRA to set gas sale prices and stipulated that the government would refrain from intervening in this process. Furthermore, within 40 days, a framework should be established to determine which categories of consumers would benefit from subsidized tariffs.
This policy shift is seen as a critical measure to address the long-standing issues in Pakistan’s energy sector. By empowering OGRA, the government can focus on broader economic reforms while ensuring that energy tariffs are set based on market dynamics rather than political considerations. This approach is expected to enhance transparency, improve efficiency, and ultimately lead to a more stable and sustainable energy sector.