Gas utilities propose up to 54% tariff hike

For the current fiscal year, the two gas utilities, SNGPL and SSGC, have proposed a 54% increase in rates to meet their revenue targets.

The law allows for twice-yearly revisions to gas prices, which are determined by the Oil & Gas Regulatory Authority (Ogra), which the government utilizes to determine consumer prices for different categories.

To assess Sui Southern Gas Company Limited’s (SSGC) request for Rs669 per unit (mmBtu), or 53.5pc, Ogra has scheduled a public hearing on 8 November. On November 5, a public hearing will be held about Sui Northern Gas Pipeline Limited’s (SNGPL) proposal for a 3.66 percent raise, or Rs64.16 per mmBtu.

In order to assess its expected income requirement for FY25, SNGPL first filed a petition on October 15 and then on October 18, it submitted a modified petition.

With an estimated revenue deficit of Rs20.582 billion, including Rs489 million due to the LPG Air Mix Project, the firm is requesting an increase in its average prescribed price of Rs64.16 per mmBtu.

The business stated that, in accordance with the ECC ruling that was approved by the federal cabinet on October 30, 2023, it has incorporated the price of RLNG-diverted volumes to indigenous gas users into the price of gas.

According to contracts made by the federal government and petrol producers/suppliers, the price of petrol is correlated with the global prices of HSFO and crude oil/Brent.

Ogra claims that if SNGPL’s rate increase of Rs64.16 per mmBtu is allowed, the average prescribed price will increase from Rs1746.22 to Rs1810.38 per mmBtu.

However, SSGC has estimated a Rs140 billion revenue shortfall for FY25 and is requesting a raise in the average prescribed price that will take effect on July 1, 2024, to make up for the rising cost of petrol.

The Karachi-based business requested an increase in the average prescribed price of Rs669.07 per mmBtu, bringing its pricing from Rs1,251.32 to Rs1,920.39 per mmBtu.

As part of the petition, SSGC has also sought Rs643 billion (Rs3073.91/mmBtu) for the unrecouped deficiency from prior years. Additionally, the petitioner estimates that the cost of service for RLNG in FY25 will be Rs46.13 per mmBtu.