The Oil and Gas Regulatory Authority (Ogra) has scheduled a public hearing in Lahore today to review a petition filed by the Sui Northern Gas Pipeline Limited (SNGPL), which is seeking a significant 147% increase in gas prices for the Fiscal Year 2024-25.
If approved, this would mark the third price increase within a year and is expected to have profound implications, potentially exacerbating inflation rates and disproportionately impacting lower-income segments of society.
SNGPL, responsible for serving over 7.22 million consumers in North Central Pakistan, mainly in Punjab, Khyber Pakhtunkhwa, and Azad Jammu and Kashmir, faces a projected revenue shortfall of Rs189.18 billion.
The proposed gas price surge, slated to commence from July 1, 2024, aims to raise the average gas price to Rs4,446.89 per Metric Million British Thermal Unit (mmbtu), reflecting an increase of Rs2,646.18 per mmbtu. This proposed price incorporates previous year’s shortfalls in the natural gas business. Additionally, SNGPL has put forward a cost of service for regasified liquefied natural gas (RLNG) at Rs325.08 per mmbtu for the same period.
Following the Lahore hearing, Ogra will hold another session in Peshawar on March 27 to allow stakeholders, consumers, and the general public to voice their concerns before making a decision on the matter.
In a separate development, the Sui Southern Gas Company (SSGC) has also petitioned Ogra for a gas price increase, citing an estimated revenue shortfall of Rs79.63 billion. SSGC proposes an increase of Rs274.40 per mmbtu, advocating for an average gas price of Rs1,740.80 per mmbtu.
Industrial stakeholders, including the All Pakistan Textile Mills Association (Aptma) and Lahore Chambers, have expressed opposition to SNGPL’s proposed tariff hike. They intend to challenge the assumptions and projections in the petition, particularly concerning RLNG diversion to the domestic sector and projected costs.
Moreover, the textile industry plans to question SNGPL regarding high unaccounted for gas (UFG) rates, which are significantly above international benchmarks. They seek clarification on various expenses, including late payment surcharge, working capital, operating expenses, and capital expenditures, in light of the company’s regular gas price revisions by the federal government.
The textile industry also intends to inquire about SNGPL’s plans to expand its network and increase domestic consumption, which could result in higher service costs and further RLNG diversion.
As the hearings progress, stakeholders will seek clarity on various financial aspects and infrastructure plans proposed by both SNGPL and SSGC, with a focus on ensuring a fair balance between industry needs and consumer affordability.
