In a move to address the fiscal challenges faced by Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC), the Oil and Gas Regulatory Authority (OGRA) has granted approval for a noteworthy increase in gas tariffs.
Effective January 1, 2024, consumers of SNGPL will experience a 35.13 per cent surge, while SSGC customers will witness an 8.57 per cent rise.
This marks the second adjustment in gas prices within the current fiscal year, following a substantial 193 per cent increase announced by OGRA, effective November 1, 2023. The decision to implement these changes is aimed at bridging the Rs98 billion shortfall collectively faced by both gas companies.
The interim government’s initial projections aimed to collect Rs980 billion, intending to cover the estimated revenue requirements of Rs700 billion for both SNGPL and SSGC.
The recommended average increase in the prescribed gas price is set at 23 per cent, reaching Rs1,590 per mmbtu, compared to the previous average of Rs1,291 per mmbtu determined on June 2, 2023.
Specifically, OGRA has outlined a 50 per cent increase (Rs415.11 per mmbtu) for SNGPL, elevating the gas price to Rs1,238.68 per mmbtu, effective July 1, 2023.
Simultaneously, the gas price for SSGC has been raised by 45 per cent (Rs417.23 per mmbtu) to reach Rs1,350.68 per mmbtu.
The decision to increase gas prices aligns with the interim government’s commitment to the International Monetary Fund (IMF), with an agreement to announce a raise in gas sale prices by February 18, 2024.
However, the OGRA Ordinance stipulates that if the government remains unresponsive to OGRA’s notification within 40 days, the determined tariff by the regulator will be automatically enforced.
The recent approval underscores the ongoing efforts to address financial challenges and ensure the sustainability of the gas sector in Pakistan.