Pakistan’s two state-run gas utilities are seeking steep tariff increases for the next fiscal year as the regulator prepares to review their revenue requirements and a proposed cut in the allowance for unaccounted-for-gas losses passed on to consumers.
The Oil and Gas Regulatory Authority has scheduled public hearings in Lahore and Karachi on May 12 and 13 to consider tariff petitions filed by Sui Northern Gas Pipelines Ltd. and Sui Southern Gas Co. for FY 2026-27.
SNGPL has asked the regulator to raise its prescribed tariff to Rs. 2,084 per mmBtu from Rs. 1,853, including the cost of LNG diversion. SSGCL is seeking a much steeper increase, according to the hearing notice issued by the regulator.
The hearings were earlier postponed in April because uncertainty over gas and LNG prices linked to the Middle East crisis complicated the review process. Under the law, Ogra must issue its determination at least 40 days before June 30 so the government can notify revised consumer tariffs from July 1.
The tariff review also carries added importance because Pakistan has committed to the International Monetary Fund to issue gas tariff notifications on time twice a year to help contain circular debt, which has risen above Rs. 3 trillion.
An independent consultant hired by the regulator has proposed a gradual reduction in the UFG allowance over the next five years. Under the recommendation, the benchmark allowance for both companies would be reduced to 6.5% in FY 2027, 6.3% in FY 2028, 6% in FY 2029, 5.8% in FY 2030 and 5.5% in FY 2031.
The proposal also allows an additional 0.5 percentage point for SNGPL and 1.7 percentage points for SSGCL to reflect local operating challenges. That would place SNGPL’s UFG allowance at 7% in FY 2027 and around 6% by FY 2031, while SSGCL’s would stand at 8.2% in FY 2027 and 7.3% by FY 2031.
At present, the system-loss allowance built into prescribed gas prices is around 7.6%, including a 2.6% performance-based UFG allowance. Actual losses currently stand at 8.8% for SNGPL and 13.6% for SSGCL.
The consultant also raised concerns over the pricing treatment of re-gasified liquefied natural gas, saying there is no separate benchmark for transmission or distribution losses on RLNG. Instead, the previous year’s average indigenous gas UFG is being used, a practice that has effectively increased RLNG sale prices by around Rs. 1,500 per million British thermal units, bringing them close to the prescribed price of domestic gas.
The outcome of the tariff review will be closely watched by businesses and households as Pakistan tries to curb energy-sector losses without adding further pressure on inflation.
