50pc gas price hike proposal re-submitted to cabinet

Minister says raising gas rates before winter is necessary to address Rs2.7 trillion circular debt.

The Petroleum Division has re-submitted a proposal for a 50 percent increase in gas sale prices to the interim cabinet, aligning with IMF demands.

As per reports, the interim cabinet is expected to approve the revised gas prices for 12 consumer categories this month (September).

The proposed increase follows OGRA’s recommendations for a 50 percent hike in Sui Northern Gas Pipeline Limited (SNGPL) prices and a 45 percent increase in Sui Southern Gas Company (SSGC) prices on June 3, 2023. The previous government did not implement this increase, potentially violating OGRA Ordinance 2022.

Interim Minister for Energy Muhammad Ali stated that raising gas rates before winter is necessary to address the gas sector’s circular debt, which stands at approximately Rs2.7 trillion.

The most recent gas tariff adjustment occurred on February 13, 2023, with a price hike of up to 113 percent.

The IMF has suggested implementing the weighted average cost of gas (WACOG) to recover Re-gasified Liquefied Natural Gas (RLNG) prices from domestic consumers. Sui Northern Gas Pipeline Limited (SNGPL) aims to recover Rs245 billion from RLNG diversion to the domestic sector from 2018 to 2023.

OGRA permits both gas companies to collect an estimated revenue requirement (ERR) of Rs697.4 billion from consumers in the fiscal year 2023-24, with SNGPL collecting Rs358.4 billion and SSGC collecting Rs339 billion.

According to OGRA, SNGPL’s average prescribed price will increase by 50 percent, while SSGC’s will rise by 45 percent, primarily due to increasing gas costs.

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Monitoring Desk
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