Govt hikes gas tariff once again

• Govt increases prices to meet Rs98bn shortfall.
• Price for SNGPL hiked by 35.13%, SSGCL by 8.57%.
• Ogra bound to announce gas tariff biannually.
  

ISLAMABAD: Citizens continue to suffer from high bills and back-breaking inflation as the Oil and Gas Regularly Authority (Ogra) further hiked the gas tariff to meet the Rs98 billion shortfall, The News reported Tuesday.

The increased prices will be effective retrospectively from January 1 till June 30. This is the second gas price hike in the current financial year 2023-24.

The government increased the tariff of Sui Northern Gas Pipelines Limited (SNGPL) by 35.13% and Sui Southern Gas Company Limited (SSGCL) by 8.57%.

On February 2, the regulator recommended the average increase of the prescribed gas price by 23.16% to Rs1,590 per MMBTU from the average price of Rs1,291 per MMBTU earlier determined on June 2, 2023.

The International Monetary Fund (IMF) wants the government to implement the gas review implementation biannually to reduce the circular debt which currently stands at Rs1,250 billion. 

The Ogra is bound to announce the gas tariff biannually and the government is bound to enforce gas prices from July 1 and then from January 1 in any current financial year.

According to Ogra's decisions uploaded on February 2 on its official website, the tariff of Sui Northern gas has increased to Rs1,673.82 per MMBTU against the price of Rs1,238.68 earlier determined on June 2, 2023. Similarly, the regulator has increased the gas tariff of Sui Southern to Rs1,466.40 per MMBTU from Rs1,350.68 per MMBTU. 

“This is the comparison of gas prices based on a determination to be effective from January 1, 2024, from the earlier determination effective from July 1 in 2023-24 fiscal,” a senior official said.

The government has received the determination of Ogra as under the Ogra ordinance if the government does not respond to the determination within 40 days, the tariff determined by the regulator will automatically be enforced.

"The caretaker government will try to take a decision by mid of the current month and enforce a further increase in the gas prices effective from February 1, 2023," an official said.

On June 2, 2023, Ogra announced a 50% increase (Rs415.11 per MMBTU) for the consumers of Sui Northern Gas, pushing the gas price up to Rs1,238.68 per MMBTU, effective from July 1, 2023. It also increased the gas price by 45% (417.23 per MMBTU) to Rs1,350.68 per MMBTU for the consumers of Sui Southern Gas for 2023-24. 

The caretaker government had increased the gas prices up to 193% effective from November 1, 2023, with an estimated revenue tariff of Rs980 billion in FY24.

Earlier the government had said that with the massive increase in gas prices effective from November 1, 2023, there will be no more monthly inflow in the gas circular debt for the financial year 2023-24. 

“This Rs980 billion target could not be achieved because of the low production of gas in the Sui Southern system from 805 mmcfd to 730 mmcfd which led to low gas sale growth resulting in limiting the revenue to Rs802 billion against the revenue target of Rs980 showing the shortfall of Rs98 billion. The Rs98 billion deficit in the revenue will be met through the average increase of both the gas companies by 23.16%,” an official told The News.