STAFF REPORT
ISLAMABAD:
In a bid to address revenue shortfalls, Sui Northern Gas Pipelines Limited (SNGPL) has approached the Oil and Gas Regulatory Authority (OGRA) with a request to substantially increase gas prices by up to 147%, heightening concerns for consumers already grappling with inflationary pressures.
The proposed hike, if approved, would entail a significant rise in gas tariffs, adding strain to households and businesses across Pakistan. SNGPL’s petition to OGRA outlines a staggering price increase of Rs 2,646.18 per Million British Thermal Unit (mmbtu), with a target average price of Rs 4446.89. This move comes in the wake of similar endeavors by Sui Southern Gas Company (SSGC), which has also sought a substantial price hike of Rs 274.40/mmbtu from July 1, 2024.
The mounting pressure on consumers is underscored by SNGPL’s estimated revenue shortfall of Rs 189 billion and 18 crore, reflecting the urgency for increased tariffs to meet operational costs and ensure returns on assets. OGRA is scheduled to deliberate on SNGPL’s application on March 25 in Lahore and March 27 in Peshawar, with a decision poised to impact gas prices effective from July 2024.
The implications of these price hikes extend beyond mere financial burdens, as evidenced by the SSGC’s projected revenue shortfall of Rs 79 billion and 63 crore for the upcoming fiscal year. This shortfall, divided between local gas and Re-gasified Liquefied Natural Gas (RLNG), underscores the broader fiscal challenges confronting gas utilities.
OGRA’s recent hearing on SSGC’s application in Karachi, coupled with upcoming sessions in Quetta, signals a concerted effort to assess the ramifications of proposed price increases. Both SNGPL and SSGC have additionally sought the transfer of RLNG cost of service, further complicating the pricing dynamics in the gas sector.
Post-hearing deliberations by OGRA will culminate in a decision forwarded to the federal government for approval, paving the way for formal notification of gas price adjustments. However, concerns loom large over the potential exacerbation of economic hardships faced by citizens amidst an already challenging inflationary landscape.
If sanctioned, the proposed price hikes are poised to amplify the cost of natural gas, exacerbating the financial strain on households and businesses nationwide. With inflationary pressures already at alarming levels, the anticipated price adjustments underscore the imperative for balanced regulatory measures to safeguard consumer interests while ensuring the financial viability of gas utilities.
