In response to the IMF’s requirements and to meet a mid-February deadline, the Oil and Gas Regulatory Authority (Ogra) has proposed substantial increases in gas tariffs, aiming to extract an additional Rs100 billion from consumers over the next four months. This move follows a significant tariff hike in November, as part of the government’s commitment to the IMF.
Notably, Ogra streamlined its public hearing process, holding only one session each in Lahore and Karachi for Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGC) respectively, excluding representation from consumers in the north and Balochistan.
The regulator has allowed high levels of unaccounted-for gas (UFG) losses, exceeding previous limits, and approved increases in human resource and sports-related expenses for gas utilities, passing these costs onto consumers. Additionally, Ogra permitted significant expenditures to control unaccounted-for gas, despite previous allocations for this purpose.
Furthermore, Ogra approved LNG cost of service and litigation charges incurred due to mismanagement, all to be borne by consumers. Unlike past practices, Ogra remained silent on tariff determinations this time.
The proposed tariff increases stand at 35.13% for SNGPL and 8.57% for SSGC for the current fiscal year, to be applied retrospectively from Jan 1 to June 30. The recommended average increase in prescribed gas price is 23%, with SNGPL and SSGC prices rising to Rs1,673.82 and Rs1,466.40 per million British thermal units (mmBtu) respectively, covering the Rs98bn shortfall of both companies.
