Gas prices expected to rise in Pakistan

ISLAMABAD: Gas prices in Pakistan are expected to rise starting in July because SNGPL and SSGC, the two main utilities, have submitted their request to the Oil and Gas Regulatory Authority (OGRA) for a major price increase.

The companies need to resolve their combined revenue deficiency, which totals Rs. 1,650 billion, because of past financial losses and their estimated funding needs for the upcoming fiscal year.

The recommended modifications will help solve the existing energy sector “circular debt” problem, which currently hinders operations.

The financial demands submitted to OGRA highlight the scale of the potential impact on consumers. The specific requests include: Sui Southern (SSGC): The company wants to set its standard price at Rs. 5,306 for each MMBTU unit.

Sui Northern (SNGPL): The company predicts its revenue will decrease by Rs. 8.73 billion in the upcoming year while it already faces a Rs. 585 billion past deficit.

LNG Diversion Costs: The two companies, between them, have filed extensive claims to recover their liquefied natural gas (LNG) service and diversion expenses, which amount to more than Rs. 100 billion.

The Gas prices in Pakistan are projected to rise from July onward, which led OGRA to plan public hearings for evaluating the need and openness of the proposed price increases.

The hearing for SNGPL is scheduled to begin on April 21, with the SSGC session following on April 22. The regulator will assess the companies’ “Unaccounted for Gas” (UFG) losses and operating costs before deciding on the final resolution.

The federal government will determine the final product sale prices after the technical evaluation has been completed. The result will lead to substantial cost increases for domestic, industrial and commercial consumers to pay for their monthly utility expenses.