To meet the mid-February deadline set by the International Monetary Fund (IMF), the Oil and Gas Regulatory Authority (Ogra) has granted concessions to gas utilities Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGC), allowing an additional Rs100 billion to be extracted from consumers over the next four months through a tariff increase ranging from 9% to 35%.
This decision is in line with the Pakistani government’s commitment to the IMF, as it had promised to revise gas tariffs by February 15, following a significant increase in November.
Ogra held a single public hearing session in Lahore for SNGPL and another in Karachi for SSGC, shortening the traditional benchmarks that included sessions in Lahore, Peshawar, and Islamabad for SNGPL, and in Karachi and Quetta for SSGC consumers. This deviation meant that consumers in the north and those in Balochistan were not adequately represented.
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Ogra allowed significant costs to control unaccounted for gas, despite already allowing about Rs 50 billion for the same purpose over the past few years. The regulator also approved over Rs 2.6 billion for security costs, allowed the cost of service for LNG, and approved litigation charges for losing an international arbitration case.
Contrary to past practices of issuing public statements on tariff determinations, Ogra remained silent this time.
For the current fiscal year (2023-24), Ogra determined a gas tariff increase for SNGPL at 35.13% and for SSGC at 8.57%, effective retrospectively from January 1 to June 30. The prescribed gas price is recommended to increase by an average of 23% to Rs1,590 per million British thermal units (mmBtu), covering the Rs98 billion shortfall of both gas companies. The prescribed price of SNGPL has been increased to Rs 1,673.82 per mmBtu, and the gas tariff of SSGC has been increased to Rs 1,466.40 per mmBtu.
