ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA) has approved an increase of up to 7% (Rs118 per mmBtu) in prescribed natural gas prices for FY2025-26, aimed at enabling the two state-owned gas utilities to meet their combined Rs886 billion revenue requirement for the upcoming fiscal year.
In its latest determination submitted to the federal government, OGRA set the average revenue requirement for Sui Southern Gas Company Ltd (SSGCL) at Rs370 billion, up from Rs354bn allowed in July. The revised prescribed price for SSGCL now stands at Rs1,777 per mmBtu, reflecting a 7.11% increase from the previous rate of Rs1,659 per mmBtu.
For Sui Northern Gas Pipelines Ltd (SNGPL), OGRA finalised a revenue requirement of Rs516 billion, setting its prescribed price at Rs1,853 per mmBtu — an increase of Rs87 per unit (5%) compared to the existing price of Rs1,766 per mmBtu.
Government Already Increased Fixed Charges in July
These adjustments follow earlier government measures implemented on July 1, which included a 50% increase in fixed charges across all consumer categories and up to 17% higher gas sale rates for industrial, power, and bulk consumers. These revisions were designed to generate an additional Rs85 billion in FY26 and to fulfil an IMF structural benchmark.
IMF-Linked Semi-Annual Adjustments
With OGRA’s new determination, the government must now decide whether to raise consumer-end gas tariffs further or increase fixed charges again. Under commitments made to the IMF, Pakistan must continue issuing semi-annual gas tariff notifications, including accounting for the cost of imported RLNG, to stem the rise of circular debt — which has already surpassed Rs3 trillion.
Both gas companies had originally requested price hikes of more than 10.7% (SNGPL) and 7.6% (SSGCL), but OGRA approved more moderate increases of 5% and 7%, respectively.
Uniform National Pricing & Cross-Subsidies
As per current practice, the government will set uniform retail gas prices nationwide based on the higher prescribed price, which in this case is SNGPL’s. The differential between the two utilities generates the Gas Development Surcharge (GDS) for provincial governments linked to production locations.
OGRA also reiterated its recommendation that all consumer categories should at least pay the average cost of service, which stands at Rs1,853 per mmBtu (SNGPL) and Rs1,777 per mmBtu (SSGCL), to ensure full recovery of delivery costs. However, the government typically maintains varied rates across consumer groups through a cross-subsidy mechanism, shifting the financial burden to middle- and high-income households, industrial, commercial, and power sectors.
Under Section 8(3) of the OGRA Ordinance, the federal government has 40 days to advise OGRA on the final price revision for each consumer category before notification in the official gazette, provided the overall average prescribed revenue remains unchanged.
Story by Khaleeq Kiani
