Gas Price Hike Hits Unprotected Consumers Hard


In line with the federal cabinet’s decision, the Oil and Gas Regulatory Authority (OGRA) has announced a significant increase in natural gas prices effective from February 1, 2024, with unprotected consumers facing the brunt of the hike.

Protected consumers will experience a gradual increase in tariff slabs, ranging from Rs. 80 to Rs. 100 per Million British Thermal Units (MMBtu), with a cross subsidy of Rs. 108 billion. However, unprotected consumers will see a larger spike in prices, ranging from Rs. 200 to Rs. 300 per MMBtu. The monthly fixed charges remain unchanged.

The new gas prices aim to meet the International Monetary Fund’s (IMF) conditions, with a deadline of February 15th. The IMF has emphasized the continuation of cross subsidies for protected consumers until financial support from the Benazir Income Support Program (BISP) is provided.

Tariffs for bulk consumption are set to rise from Rs. 2,000 to Rs. 2,900 per MMBtu, while special commercial rates, such as for Roti Tandoor, remain unchanged at Rs. 700 per MMBtu since 2015.

For the fertilizer sector, prices for Engro Fertilizer Company Limited until February 29, 2024, are set at $0.70 per MMBtu and Rs. 1597 per MMBtu from March 1, 2024. Feed gas prices for Engro Fertilizer have surged by 700 percent to Rs. 1,597 per MMBtu, and for Fauji Fertilizer Bin Qasim Limited (FFBQL), prices have increased by 175 percent.

The federal cabinet’s decision has raised concerns as gas prices for residential users have increased by up to 66 percent and for fertilizer plants by 700 percent to meet the estimated revenue requirements of both gas companies, Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC).

The hike in gas prices marks the third increase since January 1, 2023, burdening vulnerable households with up to a 65 percent increase or Rs. 100 per unit for monthly consumption of 0.5 cubic hectometers (HM3). Rates for higher consumption slabs have also seen substantial increases, with some nearing the Regasified Liquefied Natural Gas (RLNG) rate of Rs. 3,750 per MMBtu.

Related posts