ISLAMABAD: As the cost of living continues to escalate, Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) have formally submitted petitions to the Oil and Gas Regulatory Authority (OGRA) to raise gas prices by up to 50 percent.
According to sources, the requested price hike under the head Estimated Revenue Requirement for Financial Year (FY) 2024-25, if approved, is expected to heavily impact consumers, with households and businesses potentially facing a substantial increase in gas costs.
According to documents available, both Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) have submitted formal requests to the Oil and Gas Regulatory Authority (OGRA) to raise gas prices. The request comes as both companies face significant revenue shortfalls and rising operational costs, leading them to seek substantial rate adjustments to ensure financial stability.
As per available copies of both sui companies’ petition submitted with OGRA, SSGC has requested an increase of Rs. 669 per Million British Thermal Units (MMBTU), a significant hike over current rates, while SNGPL has proposed a more moderate increase of Rs. 64 per MMBTU. In total, these increases are expected to push consumer costs up by more than 50% if approved, signaling a sharp jump in energy expenses for domestic and commercial users alike.
Currently, SSGC has set its MMBTU price at Rs. 1,251 and is seeking to raise this to Rs. 1,920, marking a significant jump. In contrast, SNGPL is proposing an increase from Rs. 1,746 to Rs. 1,810.38 per MMBTU. Both companies maintain that the current rates are insufficient to cover increasing operational costs and revenue shortfalls, especially given inflationary pressures and import expenses.
SSGC has highlighted a revenue deficit of approximately Rs. 6.43 billion, which it claims cannot be effectively managed without a regulatory price adjustment. SSGC’s application notes that current gas prices do not reflect the true cost of delivery, especially in the context of sharply increasing import costs and the financial strain caused by inflation. Both SSGC and SNGPL have argued that their revenue requirements cannot be met under current rates, pointing to increased operational expenses and revenue deficits as primary justifications for the proposed hikes.
According to the company’s application, the current pricing does not reflect the actual cost of supplying gas to consumers, especially in the wake of rising import costs, inflationary pressures, and operational expenses that have sharply increased over recent months.
In line with the regulatory process, OGRA has issued public notices and scheduled separate hearings for the petitions. SNGPL’s petition will be heard on November 6, 2024, at its headquarters in Lahore, while SSGC’s hearing is scheduled for November 8, 2024, at its Karachi headquarters. These hearings are open to all stakeholders, including the general public, enabling a transparent evaluation of the proposed adjustments and their impact on the broader community.
It is pertinent to mention that the OGRA’s role in this process is crucial, as it will assess the validity of these requests by closely examining both companies’ financial data, operational costs, and the economic environment. The regulatory body’s decision will take into account the need to balance financial sustainability for the gas providers with affordability for consumers. Should OGRA approve these hikes, consumers throughout Pakistan could experience a noticeable increase in energy expenses, adding a financial burden for households and businesses.
This would not be the first time Pakistani consumers are faced with a price increase without improvements in gas availability or quality, a pattern that has previously led to public frustration.
With winter approaching, the anticipated rise in gas prices and continued load-shedding have left the public increasingly concerned about the impact on household budgets and daily life. As SSGC and SNGPL pursue up to a 50% hike in gas rates, many households fear they will pay significantly more without seeing an improvement in supply reliability. Gas load-shedding, which typically intensifies during winter, disrupts cooking, heating, and other essential activities, adding strain to families already facing high inflation and rising utility costs. The absence of stable gas availability combined with a substantial rate increase has deepened public frustration, as many consumers struggle to make ends meet while managing irregular gas supplies.
