Federal govt ends gas subsidy for fertilizer factories
ISLAMABAD: The federal cabinet has unanimously approved the discontinuation of gas subsidies for fertilizer factories, signaling a move towards more targeted support for the agricultural sector. With the closure of these subsidies, gas prices for factories will rise to Rs 1814 per mmbtu.
The decision reportedly comes amidst government efforts to streamline subsidies and channel resources directly to farmers, as it's argued that the current system of subsidizing factories does not effectively benefit agriculturalists. Previously, fertilizer factories were receiving Rs 217 per mmbtu subsidy, with gas supplied at Rs 1597 per mmbtu.
This move aligns with demands from international financial institutions, notably the IMF, which had urged Pakistan to phase out subsidies in various sectors to address economic challenges. Energy sector reforms have been particularly emphasized, with a focus on rationalizing electricity and gas rates while eliminating subsidies for industries.
Furthermore, the IMF's policy guidelines for the upcoming budget underscore the need for timely adjustments in energy pricing and the gradual transition away from subsidies. The directive to abolish tubewell subsidies and explore alternative energy sources reflects a broader strategy to enhance economic sustainability.
