SNGPL seeks 21% gas tariff hike, SSGCL pushes for 121% increase

The Oil and Gas Regulatory Authority (OGRA) is reviewing proposals to increase gas tariffs for FY2026-27, as an independent consultant has recommended a gradual reduction in unaccounted-for-gas (UFG) losses over the next five years.

According to a news report, public hearings have been scheduled for May 12 in Lahore and May 13 in Karachi to examine tariff petitions submitted by Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited.

The hearings were earlier deferred due to volatility in global energy markets linked to the Middle East situation. However, regulatory timelines require OGRA to issue its determination at least 40 days before June 30 to allow implementation from July 1.

According to disclosures, consultant KPMG Taseer Hadi & Co has proposed reducing UFG allowances to 6.5% in FY27, 6.3% in FY28, 6% in FY29, 5.8% in FY30 and 5.5% in FY31 for both utilities.

In addition, SNGPL would receive an extra 0.5% allowance for local challenges, while SSGCL would be granted an additional 1.7%. This would bring SNGPL’s UFG allowance to around 7% in FY27, declining to about 6% by FY31, while SSGCL’s would fall from approximately 8.2% to 7.3% over the same period.

Currently, the system loss allowance in prescribed gas prices stands at around 7.6%, including a 2.6% performance-based component. Actual UFG losses are reported at 8.8% for SNGPL and 13.6% for SSGCL.

The consultant also noted that under a 2016 decision of the Economic Coordination Committee, transmission losses are to be charged at actual levels, capped at 0.5%, while distribution losses are to be charged based on actual performance.

For customers on high-pressure transmission lines or those using dedicated pipelines, losses are determined on actual consumption. For other consumers, the previous year’s average UFG is used in tariff calculations.

The report highlighted the absence of a benchmark for RLNG losses, with pricing currently based on indigenous gas loss averages. This approach has increased RLNG sale prices by around Rs1,500 per mmBtu.

Separately, SNGPL has proposed raising its prescribed gas price from Rs1,853 per mmBtu to Rs2,084 for the next fiscal year, including the impact of LNG diversion.

The tariff revisions are part of broader efforts to align gas pricing with cost recovery requirements and commitments made to the International Monetary Fund to ensure timely adjustments and contain circular debt, which has exceeded Rs3 trillion.