The Oil and Gas Regulatory Authority (Ogra) has recommended a gas price increase of up to 26 percent to the federal government, aiming to generate approximately Rs. 847.33 billion during the current fiscal year. The proposal, submitted in two separate determinations on Tuesday, outlines significant price hikes for consumers of both Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL).
For SNGPL consumers in Punjab, Khyber Pakhtunkhwa, and other northern regions, Ogra has proposed an average price increase of Rs. 142.45 per million British thermal units (MMBTU), while for SSGCL consumers in Sindh and Balochistan, the suggested hike is Rs. 361 per MMBTU.
If approved, SNGPL consumers would pay a flat rate of Rs. 1,778.35 per MMBTU, up from the current Rs. 1,635.90. Similarly, SSGCL consumers would see their rates rise to Rs. 1,762.51 per MMBTU from the existing Rs. 1,401.25. These new rates are proposed to take effect from February 1, 2025, and are intended to recover the full cost of gas and address the growing circular debt in the energy sector.
The proposed adjustments represent an 8.71 percent increase for SNGPL consumers and a 25.78 percent increase for SSGCL consumers. Under the revised Ogra law, the federal government is required to determine category-wise consumer rates without altering the overall revenue requirement calculated by the regulator. Any changes in consumer rates must be achieved through cross-subsidies among consumer categories or through government-funded subsidies.
Ogra has warned that if the government fails to provide subsidies or adjust consumer rates through cross-subsidies, the flat rates of Rs. 1,778.35 for SNGPL and Rs. 1,762.51 for SSGCL will be implemented as per the amended law. This law was introduced under the International Monetary Fund’s (IMF) recommendations, and the government has committed to notifying revised gas prices effective February 1, 2025, as part of a structural benchmark agreement with the IMF.
The regulator also highlighted significant system losses, allowing SNGPL to charge consumers for 7.37 percent of unaccounted-for gas (UFG) losses under the new rates. For SSGCL, UFG losses were set at 12.45 percent.
Ogra noted that SNGPL had requested a 10.67 percent increase in average prescribed prices but was approved for an 8.71 percent hike. Similarly, SSGCL had sought a 208.67 percent increase in revenue requirements but was granted only a 25.78 percent adjustment.
Ogra has asked the federal government to provide guidance on category-wise sale prices. Any revisions advised by the government will be notified by Ogra. Until then, the existing category-wise natural gas sale prices will remain in effect, the regulator said in a statement.
