ISLAMABAD: In order to generate around Rs847.33 billion during the current fiscal year, the federal government has been advised by the Oil & Gas Regulatory Authority (Ogra) to raise gas prices by up to 26 percent.
The regulator stated that it calculated an increase of Rs142.45 per million British thermal units, or MMBTU, in the average price for Sui Northern Gas Pipelines Limited (SNGPL) customers in Punjab, Khyber Pakhtunkhwa, and other northern regions in its two distinct rulings that were sent to the federal government on Tuesday.
Sui Southern Gas Company Limited (SSGCL) customers in Sindh and Balochistan were to receive an increase of Rs361 per unit.
Starting on February 1, the regulator recommended that SSGCL charge Rs1,762.51 per unit (from Rs1,401.25 per unit currently) and each SNGPL customer pay a flat cost of Rs1,778.35 per unit (instead of Rs1,635.90 per unit).
In order to combat circular debt, a price increase has been recommended to recover the entire cost of gas from all consumers.
It has been determined that the prescribed price rise for SNGPL consumers is 8.71 percent, while for SSGCL consumers it is 25.78 percent.
The federal government must advise category-by-category consumer rates under the modified Ogra law, although the total revenue requirement determined by Ogra remains unchanged.
Only by cross-subsidy by different consumer categories or through a federal budget subsidy from taxpayer funds may the consumer rates be changed.
The regulator recalled that if it did not offer subsidy and cross-subsidy adjusted consumer prices for different categories as required by the law updated on the IMF’s recommendations, the average flat rate of Rs1,778.35 per unit would be notified for SNGPL and Rs1,762.51 per unit for SSGCL.
Additionally, a structural benchmark has been signed by the government to announce fresh gas prices based on Ogra’s assessment starting February 1, 2025.
Despite citing significant system losses, the regulator permitted SNGPL to charge customers 7.37 percent of unaccounted losses under the new tariffs.
Additionally, it calculated SSGCL’s 12.45% Unaccounted for Gas (UFG) losses.
According to the regulator, SSGCL requested a 208.67% increase in income requirements but was only granted 25.78%, while SNGPL requested a 10.67% increase in average recommended prices but was only granted 8.71%.
The price increase from the current Rs1,410.25 per MMBTU to Rs4,325.24 per MMBTU was requested by the SSGCL.
The regulator, however, has decided to raise the price by Rs 361.26 per MMBTU to Rs 1,762.51 per MMBTU.
The SSGCL estimated that it would need Rs401.655 billion in revenue for FY 2024–2025 in their petition. Ogra, however, calculated it to be Rs319.481 billion.
In a similar vein, the business requested Rs502.981 billion to make up for the income gap from the prior year. The regulator did, however, approve Rs48.853 billion.
The price increase from Rs1,810.38 per MMBTU was sought by SNGPL. The regulator, however, has decided to raise the price by Rs142.45 per MMBTU to Rs1,778.35 per MMBTU.
The SNGPL has estimated a revenue demand of Rs580.744 billion for FY 2024–2025 in their plea. But according to OGRA, it was Rs527.548 billion.
Oddly, the regulator granted the SNGPL Rs50.803 billion despite the company not requesting any compensation for the revenue deficit from the prior year.
“The federal government has been asked for guidance on category-wise sale prices through these determinations,” Ogra added.
Ogra will notify the appropriate parties of any revisions as recommended by the federal government. It stated in a statement that “the current category-wise natural gas sale prices shall continue to prevail until such time.”
