The Oil and Gas Regulatory Authority has proposed a new gas tariff revision for the fiscal year 2025–26, recommending an increase in prescribed prices for consumers of Sui Northern Gas Pipelines Limited while suggesting a reduction for customers served by Sui Southern Gas Company Limited. The proposed gas tariff revision, set to take effect from July 1, 2025, has been forwarded to the federal government for final approval.

The move follows OGRA’s assessment under the Review of the Estimated Revenue Requirement, which evaluates utilities’ financial needs based on operational costs, gas procurement, system losses, and return on assets.

Higher Gas Tariff Revision for Punjab and KP Consumers

Under the proposed gas tariff revision, OGRA has approved a 6.57 percent increase in the prescribed gas sale price for SNGPL, impacting consumers in Punjab and Khyber Pakhtunkhwa. The regulator has recommended raising the price by Rs116.90 per MMBTU, taking it to Rs1,895.25 per MMBTU for FY2025–26.

OGRA has determined SNGPL’s revenue requirement at Rs534.45 billion, significantly lower than the Rs700.97 billion sought by the utility. SNGPL had argued for a much steeper increase, citing a revenue shortfall exceeding Rs207 billion and escalating gas procurement costs, but the regulator moderated the hike as part of the gas tariff revision process.

Relief Proposed for Sindh and Balochistan Consumers

In contrast, the gas tariff revision proposes a reduction of 5.9 percent for consumers in Sindh and Balochistan under SSGCL’s jurisdiction. OGRA has recommended cutting the prescribed price by Rs103.95 per MMBTU, lowering it to Rs1,658.56 per MMBTU.

The regulator approved a revenue requirement of Rs354.17 billion for SSGCL, considerably below the company’s request. SSGCL had sought a dramatic increase of 135 percent in its prescribed gas price, citing cumulative revenue shortfalls of nearly Rs499 billion, including recoveries from previous years. OGRA’s decision reflects a more conservative approach within the gas tariff revision framework.

Related: OGRA Approves Reduction in Gas Prices for Current Fiscal Year 

RLNG Diversion Emerges as a Key Cost Driver

OGRA has identified the diversion of Re-gasified Liquefied Natural Gas as a major contributor to the higher gas tariff revision for SNGPL. The issue stems from a federal cabinet decision taken on October 30, 2023, which led to a sharp rise in RLNG diversions to cover supply gaps.

The regulator expressed concern over the exponential growth in such diversions and warned that continued reliance on RLNG without structural reforms could further strain the gas sector. OGRA has urged SNGPL to engage urgently with the federal government to reassess gas supply management, taking into account sectoral demand, long-term international contracts, and broader economic constraints.

Balancing Utility Sustainability and Consumer Impact

According to OGRA, the gas tariff revision aims to strike a balance between ensuring the financial sustainability of gas utilities and minimizing the burden on consumers. The regulator emphasized that unchecked price hikes could adversely affect household affordability and industrial competitiveness, while under-recovery threatens the operational viability of distribution companies.

The authority reiterated that tariff adjustments are based on audited data, system loss benchmarks, and regulated returns, and are not final until endorsed by the federal government.

Awaiting Federal Approval and Notification

A summary of the proposed gas tariff revision has been submitted to the federal government for consideration. Once approved, OGRA will issue a formal notification, and the revised gas prices will be implemented from the start of the new fiscal year.

Until then, the proposed gas tariff revision remains subject to government review, as policymakers weigh its fiscal, economic, and social implications amid broader energy sector reforms.