OGRA slashes gas tariffs by up to 8%

ISLAMABAD:

The Oil and Gas Regulatory Authority (OGRA) on Monday slashed the gas prices by up to 8 per cent for consumers of Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC), in line with revenue requirements for the fiscal year 2025-26.

The regulator has also passed on Rs60 billion to consumers to clear prior adjustments and the stock of gas circular debt.

Following a federal cabinet decision dated July 1, 2024, it has adjusted Rs13,565 million for SNGPL and Rs47,315 million for SSGCL against previous shortfalls and the existing circular debt. The decision has been sent to the federal government for notification of consumer gas prices, which involve cross-subsidies across categories.

In a statement, OGRA said it carefully reviewed the revenue requirement of SNGPL and SSGCL and rationalised the demand by optimising costs as well as revenues.

The regulator added that the impact of deferred cargoes in the case of Pakistan LNG Limited has been included to the benefit of gas consumers.

Accordingly, the average prescribed price for FY 2025-26 has been provisionally determined at Rs1,804.08 per MMBTU for SNGPL and Rs1,549.41 per MMBTU for SSGCL, reflecting reductions of 3 per cent and 8 per cent, respectively, over current prescribed rates.

 

OGRA said the measures are in line with its mandate to protect consumers' interests and promote fiscal discipline.

"Through the above said determination, Federal Government has been requested for advice on category-wise sale prices. Any revision, as advised by Federal Government, shall be accordingly notified by OGRA. Till such time the existing category-wise natural gas sale prices shall continue to prevail," the statement added.

Earlier, SNGPL had sought an average price increase of 28.62 per cent, equivalent to Rs505.64 per MMBTU, while SSGC had requested an increase of 21.82 per cent, or Rs361.87 per MMBTU, for FY 2025-26.

Both companies cited a combined shortfall of over Rs77 billion to cover rising costs and system inefficiencies.

SNGPL projected a revenue shortfall of Rs52.958 billion for the fiscal year, citing higher imported RLNG costs, operating expenses, and depreciation. It had requested a total increase of Rs505.64 per MMBTU, with Rs189 per MMBTU for indigenous gas supply and Rs316.64 per MMBTU for RLNG service costs.

This would have raised SNGPL's average prescribed price to Rs2,272.14 per MMBTU, including a hike for indigenous supply to Rs1,955.50 per MMBTU from the current Rs1,766.50.

SSGC projected a shortfall of Rs24.049 billion, attributing the demand primarily to rising gas purchase costs, depreciation, and financial charges.

It had sought an average increase of Rs361.87 per MMBTU, which includes Rs125.41 per MMBTU for indigenous gas, Rs178.59 per MMBTU to recover past shortfalls and Rs57.87 per MMBTU as cost of RLNG services.

This would have raised SSGC's average prescribed price to Rs2,020.42 per MMBTU from the existing Rs1,658.55.