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Gas Price Hike Attributed to LNG Diversion

Gas Price Hike Attributed to LNG Diversion

In Lahore, Sui Northern Gas Pipelines Limited (SNGPL) has underscored that the human resources’ cost comprises only 4% of the total gas price, with 94% attributed to the cost of gas and the remainder to return on capital expenditure.


According to a spokesperson for SNGPL, a significant factor driving the increase in gas prices is the continual depletion of domestic gas resources. This has led to the redirection of re-gasified liquefied natural gas (RLNG) to domestic consumers, particularly during winter. The average cost of RLNG stands at approximately Rs3,500 per million British thermal units (mmBtu), whereas the average sale price for the domestic sector is approximately Rs1,100 per mmBtu.

Also Read: SNGPL’s Stance on Gas Price Determination

This disparity, amounting to Rs231 billion, has necessitated the recent price hike, as the cost of RLNG diversion must be recuperated to sustain the LNG supply chain, as per the spokesperson.

Moreover, the spokesperson highlighted that the cost of indigenous gas has surged by Rs69 billion due to a 55% devaluation of the Pakistani rupee over the past two years. Additionally, all gas purchase contracts are denominated in US dollars and are linked with crude and furnace oil prices.

Despite the recent tariff adjustment, the average rate for the protected class of domestic consumers remains at Rs513 per mmBtu, significantly lower than the cost price of Rs1,674. The protected category comprises approximately 4.4 million consumers in the SNGPL network, constituting 60% of the total consumers. Their bills during the winter month of February stayed below Rs2,000 (inclusive of taxes).

Furthermore, despite the tariff revision, a subsidy of Rs128 billion is estimated to be provided to domestic consumers of SNGPL during FY24, the spokesperson noted. He emphasized that the gas business is subject to rigorous regulation under the Ogra Ordinance, 2002. Since 2002, the Oil and Gas Regulatory Authority (Ogra) has conducted public hearings to determine the revenue requirements of gas companies.