Gas price hike

OGRA has approved a 75% increase in the price of gas after both gas suppliers petitioned the company for price hikes

January 13, 2023

The Oil and Gas Regulatory Authority (Ogra) has approved an astronomical 75% increase in the price of gas after both gas suppliers petitioned the company for price hikes. Incredibly, the approved price hike was well below the amounts demanded by Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL). SNGPL reportedly wanted to raise prices by an astounding 237%. In comparison, SSGCL was asking for permission to hike prices by ‘just’ 101%. The approved increases were 74.42% for SNGPL and 75.35% for SSGCL. However, it must be noted that the going rate for SSGCL customers remains much higher — Rs1,161.91/mmBtu after the increase, compared to Rs952.17/mmBtu for SNGPL customers post-increase.

The federal government has 40 days to challenge Ogra’s approved prices, but such challenges are historically rare, even less so when rising international prices and other input costs justify an increase. But justified or not, an increase of this magnitude will be crippling for poor and middle-class families, with the only respite being that the worst of winter will probably be behind us by the time the increase takes effect. The impact on residential users will also be compounded by the fact that Ogra has fixed a uniform rate for all categories of consumers, rather than the variable rates of the past. This means that home users will have to pay the same rate as for-profit industries and commercial outfits — meaning that in some cases, users may see their rates triple.

While there are no quick fixes — barring unaffordable subsidies — to relieve consumers, the government needs to learn from past mistakes and develop policies on LNG imports to ensure that partisan politics do not lead to the rejection of good early deals and force bad last-minute ones upon us. Measures also need to be taken to improve pipeline efficiency and encourage the adoption of gas alternatives — such as coal or self-sourced renewable electricity for large industrial consumers — if we are to reduce our ever-increasing reliance on imported gas to keep the stoves burning.

Published in The Express Tribune, January 13th, 2023.

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