Gas Price Increase Announced for Upcoming Fiscal Year

PAKISTAN: Two government-owned gas utility companies have applied for large increases in their tariffs before the authority regulates a gradual decrease in the unaccounted-for gas loss charge to consumers.

The Oil and Gas Regulatory Authority has scheduled public hearings for both SUI Northern and SUI Southern (the gas utility companies) on May 12 and 13, 2023, in Lahore and Karachi, respectively, to deliberate on the companies’ petitions for tariff changes for the fiscal year 2026-27.

SUI Northern is requesting to raise its current tariff from Rs. 1,853 to Rs. 2,084, which includes the cost for LNG diversion in its future tariffs for fiscal years 2026-27. SUI Southern’s request for an increase in its future tariffs is significantly more than awaited by the authority’s notice of hearing.

The current system-loss allowance built into prescribed gas prices is about 7.6%, including a 2.6% performance-based UFG allowance. Actual UFG losses stand at 8.8% for SNGPL and 13.6% for SSGCL.

The consultant also flagged the pricing treatment of re-gasified liquefied natural gas, saying there is currently no separate benchmark for transmission or distribution losses on RLNG. Instead, the previous year’s average indigenous gas UFG is being used, a practice that has effectively raised RLNG sale prices by around Rs. 1,500 per million British thermal units, nearly matching the prescribed price of domestic gas.

The tariff review will be closely watched by industry and households as Pakistan tries to rein in energy-sector losses without adding further pressure to inflation.