Govt keeps gas tariffs unchanged despite Ogra cut in prescribed prices

The federal government has decided to maintain existing gas tariffs for the 2026-27 financial year despite the Oil and Gas Regulatory Authority (Ogra) reducing prescribed prices for both Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), The News reported, citing official sources.

The government has also informed the International Monetary Fund (IMF) that it will not pass on the reduction in prescribed prices to consumers.

Ogra has reduced the average prescribed gas price for the two utilities from Rs1,793 per MMBtu to Rs1,705 per MMBtu. The regulator fixed SNGPL’s prescribed price at Rs1,719 per MMBtu and SSGC’s at Rs1,691 per MMBtu.

Despite the reduction, consumer tariffs will remain unchanged. 

Officials said the decision would keep both gas utilities financially stable, with SNGPL expected to post a surplus of around Rs44 billion and SSGC a surplus of about Rs2.5 billion.

The lower prescribed prices are mainly linked to the exclusion of LNG diversion costs after QatarEnergy declared force majeure on LNG supplies to Pakistan on March 4, 2026. As a result, the cost of diverting imported RLNG to domestic consumers was not included in Ogra’s determination.

Last year, Ogra had determined SNGPL’s prescribed price at Rs1,895 per MMBtu, which included nearly Rs180 billion in RLNG diversion costs for the domestic sector.

The Petroleum Division official said Ogra’s determination was received on June 23 and the government responded on June 30, informing the regulator that current gas prices would be maintained.

Officials said the utilities are expected to file revised tariff petitions once LNG supplies from Qatar normalise. QatarEnergy may lift the force majeure by August 2026, after which LNG exports to Pakistan are expected to resume. Any renewed diversion of RLNG to domestic consumers could push prescribed prices higher.

Ogra has also maintained major disallowances against both companies over excessive Unaccounted-for Gas (UFG) losses. It disallowed Rs15 billion for SNGPL and Rs21.5 billion for SSGC after both exceeded the permissible UFG benchmark of 5% fixed losses and 2.5% variable losses.

SNGPL’s system losses were around 7%, while SSGC’s stood at about 12.5%.

Based on a KPMG study, Ogra has introduced new UFG benchmarks requiring both utilities to reduce system losses over the next five years gradually. The regulator plans annual reductions of 0.5 to 1 percentage point to bring average UFG losses down to 5.5%.