ISLAMABAD: From July 2023, consumers can expect a potential 50 percent hike in natural gas prices in Pakistan.
On Friday, the Oil and Gas Regulatory Authority (Ogra) finalized its determination of two troubled state-run gas utilities and submitted them to the government for issuing notifications. For the upcoming financial year 2023-24, OGRA has calculated an estimated revenue requirement (ERR) of Rs 697.4 billion to be collected from gas consumers. Sui Northern Gas Pipeline Limited (SNGPL), which is responsible for supplying gas to consumers in Punjab and Khyber Pakhtunkhwa (KP), will raise Rs 358.4 billion.
ss Meanwhile, Sui Southern Gas Company (SSGC), which supplies gas to consumers in Sindh and Balochistan, will collect Rs 339 billion. The average price fixed by OGRA for SNGPL is 1238.68/MMBTU, reflecting a 50% increase or Rs 415.11 over the current price. Similarly, the average recommended price for SSGC has been fixed at Rs 1350.68/MMBTU, representing an increase of Rs 417.23 or 45%. Ogra clarified that the average fixed price mainly consists of gas price which is more than 85% of the fixed price. This cost is a pass-through item and is calculated based on the agreement between the Government of Pakistan and the gas producing companies. The decision taken by OGRA has been sent to the government for notification, which is expected in 40 days. Once implemented, SNGPL and SSGC will be authorized to collect hundreds of billions of rupees from consumers.
The SNGP initially requested a revenue requirement of Rs 1,044.12 billion, including a revenue shortfall of Rs 560.38 billion from the previous year. Based on this, SNGPL sought a 286% increase to Rs 2,206.19/MMBTU, aiming to fix fixed prices at Rs 2,977.5/MMBTU. Similarly, SSGC requested an increase of 42%, with a request of 388.01/MMBTU to recover Rs 331.68 billion, resulting in a proposed price of 1321.47/MMBTU. The regulator has proposed to eliminate the distinction between protected and unprotected slabs for gas consumers and fix the price at 1238.68/MMBtu.
This change will result in a significant increase of up to 923% in gas prices for protected low-slab customers. However, the two heavy gas consuming slabs will benefit from the new prices as they were earlier paying up to Rs 3100/MMBtu. The regulator has also recommended a substantial hike in gas prices for roti tandoors. Interestingly, while gas will become more expensive for zero-rated consumers, CNG stations, cement, fertilisers, power stations and Independent Power Producers (IPPs) will face a cut in gas prices. However, feedstock gas prices for the fertilizer sector will more than double.
Current fixed gas prices for cement, CNG, ice factories, commercial consumers, fertilizer feedstock gas, power stations, captive power, and IPPs are Rs 1500/MMBtu, Rs1805/MMBtu, Rs 1650/MMBtu, Rs 1650/MMBtu. MMBtu, Rs 510/MMBtu, are Rs 510/MMBtu. /MMBtu, Rs1200/MMBtu, and Rs1050/MMBtu, respectively. The regulator now proposes a uniform price of 1238.68/MMBtu for all these categories.
SSGCL
For SSGC clients, the regulator has proposed to eliminate the distinction between protected and unprotected slabs and fix fixed prices at Rs1350.68/MMBtu. The tariff for the first slab of domestic consumers on the SSGC system has been increased from Rs 200 per mmbtu to Rs 1350.68 per mmbtu. The current price of the second slab is Rs 300, the third slab is Rs 400, the fourth slab is Rs 600, the fifth slab is Rs 800, the sixth slab is Rs 1100, the seventh slab is Rs 2000 and the eighth slab is Rs 3100. 1350.68/MMBtu
This indicates a significant increase in gas tariff for the lower slabs, while the higher slabs will see a substantial reduction. It should be noted that more than 80 percent of gas consumers fall within the minimum three to four slabs. A tariff of Rs 1350.68 per mmbtu has been proposed for all five slabs for roti tandoor category of gas consumers with existing tariffs ranging from Rs 110 to Rs 700 per mmbtu. Gas tariff for commercial gas consumers including ice factories has been reduced from Rs 1650 per mmbtu to Rs 1350.68 per mmbtu. The tariff for general industry has been increased from the existing Rs 1200 to Rs 1350.68 per mmbtu. For general export-oriented industry, the tariff has been increased to Rs 1350.68 per mmbtu from the existing Rs 1100. Captive power generation tariff has been increased from Rs.1200 to Rs.1350.68.
A fixed price of Rs 1350.68 per mmbtu has been fixed for all these categories, including cement (previously priced at Rs 1500 per mmbtu), CNG (previously priced at Rs 1805 per mmbtu). BTU), Fuji Fertilizer Bin Qasim Feedstock for Fertilizer (previously priced at Rs. 51/MMBtu), Power Generation (previously priced at Rs. 1050/MMBtu), Pakistan Steel (previously priced at Rs. 1200/MMBtu), and IPPs (Earlier price 1050/MMBtu).
