Ogra approves up to 7% gas price hike

Ogra by increasing prices aims to ensure SNGPL and SSGCL meet their combined revenue targets of Rs886 billion
A undated image of a gas stove. — Canva
A undated image of a gas stove. — Canva 

The Oil and Gas Regulatory Authority (OGRA) has approved a gas price hike of up to 7% for the current fiscal year to help Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL) meet their revenue requirements.

The average revenue requirement for SSGC has been fixed at Rs370 billion according to Ogra’s latest determination on Tuesday, which is up from Rs354 billion last year. The regulator fixed SSGCL’s prescribed price at Rs1,777 per million British thermal units (mmBtu), reflecting a 7.11% increase or Rs118 per unit.

SNGPL was allowed a revenue requirement of Rs516 billion, for which a prescribed price of Rs1,853 per mmBtu has been allowed finally, against the allowed increase of 5% or Rs87 per unit.

The government had raised by 50% fixed gas charges for all consumers and by up to 17% industrial, power, and bulk gas rates in the earlier fiscal year. These also met the IMF conditions at an additional consumer cost of about Rs85 billion.

While SNGPL and SSGCL had applied for bigger increases of 10.7% and 7.6%, respectively, Ogra approved slightly lower increases. The federal government has started notifying the uniform consumer-end gas price across the country. The differential price develops a Gas Development Surcharge (GDS) for provinces.

Ogra revises prescribed gas prices on a six-month basis. The government has to notify the changes in the Official Gazette within 40 days to enable the gas companies to achieve the revenue requirement. It insisted that all consumer categories at least pay the average cost of service provision to prevent the accumulation of further circular debt, which has already surpassed Rs3 trillion.