Consumers can expect a potential 50% increase in natural gas prices in Pakistan starting from July, The News reported, when the new fiscal year begins.
The Oil and Gas Regulatory Authority (Ogra) Friday concluded its determinations for two struggling state-run gas utilities and submitted them to the government for issuance of notification.
For the upcoming fiscal year 2023-24, Ogra has calculated an estimated revenue requirement (ERR) of Rs697.4 billion to be collected from gas consumers.
The Sui Northern Gas Pipeline Limited (SNGPL), responsible for gas supply to consumers in Punjab and Khyber-Pakhtunkhwa (KP), will collect Rs358.4 billion.
Meanwhile, the Sui Southern Gas Company (SSGC), which supplies gas to consumers in Sindh and Balochistan, will collect Rs339 billion.
The average prescribed price determined by Ogra for SNGPL stands at Rs1,238.68/mmBtu, reflecting a 50% increase or Rs415.11 compared to the existing price.
Similarly, the average prescribed price for SSGC is set at Rs1,350.68/mmBtu, representing a Rs417.23 increase or 45%.
Ogra clarified that the average prescribed price mainly consists of the cost of gas, which accounts for over 85% of the determined price.
This cost is a pass-through item and is calculated based on the agreement between the Government of Pakistan and gas producer companies.
The decision made by Ogra has been forwarded to the government for notification, which is expected to occur within 40 days. Once implemented, the SNGPL and the SSGC will be authorised to collect hundreds of billions of rupees from consumers.
The SNGP initially requested revenue requirements of Rs1,044.12 billion, including a revenue shortfall from the previous year amounting to Rs560.38 billion.
Based on this, the SNGPL sought a 286% increase of Rs2,206.19/mmBtu, which was aimed to set prescribed prices at Rs2,977.5/mmBtu.
Similarly, the SSGC requested an increase of 42%, seeking Rs388.01/mmBtu to recover Rs331.68 billion, resulting in a proposed prescribed price of Rs1,321.47/mmBtu.
The regulator has proposed eliminating the distinction between protected and unprotected slabs for gas consumers and setting the price at 1238.68/mmBtu.
This change will result in a significant increase in gas prices, up to 923%, for protected low-slab consumers. However, two highly gas-consuming slabs will benefit from the new pricing as they were previously paying up to Rs3,100/mmBtu.
The regulator has also recommended a substantial increase in gas prices for roti tandoors.
Interestingly, while gas will become more expensive for zero-rated consumers, CNG stations, cement, fertilizer, power stations, and independent power producers (IPPs) will experience a reduction in gas prices. However, the feedstock gas prices for the fertilizer sector will more than double.
The existing prescribed gas prices for cement, CNG, ice factories, commercial consumers, fertiliser feedstock gas, power stations, captive power, and IPPs are Rs1,500/mmBtu, Rs1,805/mmBtu, Rs1,650/mmBtu, Rs1,650/mmBtu, Rs510/mmBtu, Rs1,050/mmBtu, Rs1,200/mmBtu, and Rs1,050/mmBtu, respectively.
The regulator now suggests a uniform prescribed price of Rs1,238.68/mmBtu for all these categories.
