Gas Prices for Captive Power Plants Likely to Spike Over Rs. 4,000 per MMBtu

The federal government is preparing to increase gas prices for captive power plants by up to Rs. 1,100 per MMBtu, bringing the cost to over Rs. 4,000 per MMBtu, high level sources informed ProPakistani. The adjustment is a key condition set by the International Monetary Fund (IMF) which has insisted that regasified liquefied natural gas (RLNG) supplied to captive power plants be sold at its full import cost. Currently, Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) supply gas to 1,180 captive power plants. These facilities consume 242 MMCFD of locally produced gas and 156 MMCFD of imported RLNG. Sources said the IMF has demanded the withdrawal of various incentives provided to these power producers. Sources added that the revised pricing mechanism will be implemented this month. The move follows a similar price hike in June 2024 under the IMF program, which aims to eliminate energy subsidies and align prices with global market rates. A report on the proposed price increase is expected to be shared with the IMF during the upcoming economic review. Sources added that failure to implement the rate hike could jeopardize the government’s compliance with IMF conditions and delay release of next IMF tranche under its $7 billion bailout program.