The government of Pakistan plans to increase natural gas prices for various consumer categories, including non-protected domestic consumers, bulk consumers, commercial consumers, the export industry, the non-export industry, CNG (Compressed Natural Gas), cement, and Liberty Power. These increases range from 25 percent to 193 percent, sources close to the Petroleum Ministry said.
However, there will be no change in gas prices for the “protected” category of domestic consumers, Roti Tandoor, and the feed gas of Engro’s fertilizer plant. For protected consumers, the fixed monthly charge has been significantly increased from Rs 10 to Rs 400, amounting to a 3900 percent increase.
The government has not adequately revised consumer gas prices in line with OGRA’s determinations since FY 2013-14. As per a report by BR, this has led to an accumulation of revenue shortfalls, with SSGCL and SNGPL facing a total shortfall of Rs. 878 billion as of June 2023. It is said that price inaction could lead to a revenue shortfall of Rs 185 billion on natural gas alone, contributing to the circular debt in the petroleum sector.
Affordability for certain consumer categories is to be ensured through cross-subsidies funded by surplus revenues generated from other consumer categories.
Tariffs have been revised for different sectors, including commercial consumers, power generation, and industry, to create a level playing field and reduce price disparities.
Higher prices for CNG and the cement sector are proposed to encourage the switch to alternate fuels. Sui companies will offer blended gas based on the availability of natural gas and RLNG (Re-gasified Liquefied Natural Gas). The prices for feed gas for fertilizer plants have been proposed to remain lower to ensure affordable urea prices for farmers.
It is notabe that the Petroleum Division emphasizes that gas price revisions should be consistent with OGRA’s revenue requirements, as per the legal provisions in the OGRA Ordinance of 2002.
