New Gas Tariffs in Pakistan- What do they mean for you

OGRA has recently announced new gas tariffs in Pakistan. These new tariffs were necessary as consumers were paying heavily subsidized prices compared to the cost of gas. This led to extremely wasteful behaviour of the consumers, exponentially increasing the demand for gas and forcing the country to start importing expensive LNG to fill the supply-demand gap.

For instance, the average cost of delivering gas to consumers is Rs. 738/MMBTU for utility companies in 2019. And LNG is imported at over Rs. 1500/MMBTU. According to the old prices, only consumers using more than 300m3 per month were paying prices higher than the cost of gas. That meant pretty much the whole of Pakistan was being subsidized, not only the poor (who need less than 20m3 per month).

Increase in gas tariffs July 2019. Consumers will now also get the benefit of one lower slab, which reduces the net increase in their bills.

Now, don’t panic yet. Although the increases are large in each slab. However, consumers now receive the benefit of one previous slab, which was not the case before. So the net increase in the bills is lower than may seem above. Note: Our meters measure volume of gas (m3) consumed, but we are billed based on the energy contained in that volume (MMBTU).

Impact of new gas tariffs on monthly gas bills

So, for instance, if you consume 100m3 per month, your bill will not increase by 136%, but rather by 65%. This is because you will pay for the first 50m3 at Rs.121/MMBTU and for the next 50m3 at Rs.300/MMBTU. Similarly, if you use 200m3 per month, your bill will increase by 61%, not 109%. Your first 100m3 will be charged at Rs. 300/MMBTU and then next 100 at Rs.553/MMBTU. Note: In the above table, I have used the top limit for each slab to calculate the bill. For the highest slab, I have used 500m3 to calculate the bill.

Now what happens when your gas usage goes into a higher slab?

What happens when your gas usage increases slight and you go into the next slab?

Well, if you use 101m3 instead of 100m3 in a month, your bill will go up by 45%, even though your consumption just increased by 1%. Similarly, if you use 201m3 in the month instead of 200, your bill will increase by 30%, although your consumption increased by only 0.5%. And your bill will be 5.3 times higher than if you had used only 100m3.

Now, if that isn’t a good reason to start conserving gas, I don’t know what is!

Check out my post on how to find gas leaks in your home and office, so you can keep your family safe and keep your bills low. Stay tuned for my next post, which will show you how to reduce your household’s monthly gas consumption to under 100m3. Or just visit our Facebook Page for the many tips we add there daily to help you reduce your gas and electricity bills.

You can also visit our website, Savejoules.com, to compare and choose the most energy efficient appliances for your home.

Meanwhile, let me know if you have any questions on gas prices.

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