Ogra Approves Up to 7% Hike in Gas Prices

The Oil and Gas Regulatory Authority (Ogra) has determined an increase of up to 7% in natural gas prices for the next fiscal year, aiming to help Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL) meet a combined revenue requirement of Rs. 886 billion for 2025-26. In its latest determination sent to the federal government, Ogra set SSGCL’s average revenue requirement at Rs. 370 billion, up from Rs. 354 billion last July. The regulator fixed SSGCL’s prescribed price at Rs. 1,777 per million British thermal unit (mmBtu), marking a 7.11% increase, or Rs. 118 per unit. For SNGPL, the revenue requirement was set at Rs. 516 billion, with a final prescribed price of Rs. 1,853 per mmBtu, an increase of 5%, or Rs. 87 per unit, from the previous rate of Rs. 1,766 per unit. Earlier this fiscal year, the government had already raised fixed gas charges for all consumers by 50% and increased per-unit gas sale rates for industrial, power, and bulk consumers by up to 17%, adding an estimated Rs. 85 billion in additional costs for consumers to meet IMF benchmarks. The government now faces a decision on whether to raise consumer-end gas rates further or adjust fixed charges, as it has committed to the IMF to continue semi-annual gas tariff adjustments based on Ogra’s determinations, including the cost of imported RLNG. Both SNGPL and SSGCL had requested price hikes of more than 10.7% and 7.6%, respectively, but Ogra approved lower increases. The government typically notifies uniform gas rates nationwide based on the higher of the two prescribed prices, with the resulting revenue difference generating a Gas Development Surcharge (GDS) for provinces. Ogra revises prescribed gas prices twice a year, and the government sets consumer prices for different categories accordingly. The regulator has urged that all consumer categories should at least pay the average cost of service, Rs. 1,853 per mmBtu for SNGPL and Rs. 1,777 per mmBtu for SSGCL, to ensure full cost recovery. The government has also pledged to the IMF to issue timely biannual notifications of gas rates, aiming to prevent further accumulation of circular debt, which has already surpassed Rs. 3 trillion. Under Ogra law, the federal government must respond within 40 days of Ogra’s determination regarding price revisions and notify the changes in the Official Gazette, ensuring gas companies can meet their revenue targets.