Ogra suggests gas tariff increase for SNGPL, cut for SSGC

• Gas prices revised for FY2025-26 by Ogra.
• Rs534bn revenue need set for SNGPL.
• Final rates subject to government approval.
  

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) on Tuesday proposed revised gas tariffs for the fiscal year 2025–26, recommending an increase for Sui Northern Gas Pipelines Limited (SNGPL) and a reduction for Sui Southern Gas Company Limited (SSGCL), effective from July 1, The News reported. 

The final decision now rests with the federal government.

Ogra finalised the Review of Estimated Revenue Requirement (RERR) for both companies for FY2024–25. As per the determination, the prescribed gas sale price for consumers in Punjab and Khyber Pakhtunkhwa, served by SNGPL, has been increased by 6.57%. 

Meanwhile, for consumers in Sindh and Balochistan under SSGCL’s network, the tariff has been reduced by 5.9%.

Specifically, Ogra proposed an increase of Rs116.90 per MMBTU in SNGPL’s prescribed price, bringing it to Rs1,895.25 per MMBTU. Conversely, it recommended a decrease of Rs103.95 per MMBTU for SSGCL, setting the new rate at Rs1,658.56 per MMBTU.

The regulator has determined the revenue requirement of Sui Northern at Rs534.45 billion for FY2025-26 and for Sui Southern Rs354.17 billion. 

SNGPL has sought a 58% hike in its prescribed gas price to Rs2,803 per MMBTU, citing a Rs207.4 billion revenue shortfall and rising gas costs. 

It requested a revenue requirement of Rs700.97 billion, but Ogra has allowed Rs534.46 billion, setting the price at Rs1,895.25 per MMBTU for FY2025-26.

The proposed increase in SNGPL’s prescribed price is primarily attributed to the financial burden of RLNG diversion, an outcome of a federal cabinet decision on October 30, 2023. 

Ogra has raised red flags over the exponential increase in such diversions, calling on SNGPL to initiate urgent consultations with the federal government to review gas supply management in light of sectoral energy demands, global contractual obligations, and economic realities.

SSGCL had requested a 135pc increase in its prescribed gas price to Rs4,137.49 per MMBTU, up from Rs1,762.51, citing a cumulative revenue shortfall of Rs498.76 billion, including past recoveries. 

A summary of the proposed revisions has been sent to the federal government for final approval. Once endorsed, Ogra will issue a formal notification, and new rates will be implemented accordingly.