ISLAMABAD (Kashmir English): The two state-owned gas companies request major price hikes for the upcoming fiscal period, while the regulatory body considers decreasing the permit for unrecorded gas losses, which they bill to their customers.
The Oil and Gas Regulatory Authority has scheduled public hearings for May 12 and 13 in Lahore and Karachi to review tariff applications submitted by Sui Northern Gas Pipelines Ltd. and Sui Southern Gas Co. for the fiscal year 2026-27. SNGPL wants to increase its regulated tariff from Rs. 1,853 to Rs. 2,084 per mmBtu in the upcoming fiscal year, with the LNG diversion cost included.
SSGCL requires a significant tariff increase to be approved, according to the hearing notice issued by the regulatory authority. The hearings were postponed in April because the Middle East crisis caused uncertainties about gas and LNG prices, which affected the review process.
The regulator needs to make its decision public at least 40 days before June 30 so that the government can announce new consumer prices that will take effect on July 1.
The timing is also significant because Pakistan has committed to the International Monetary Fund to issue gas tariff notifications twice a year on time to help contain circular debt, which has climbed above Rs. 3 trillion.
The independent consultant hired by the regulatory body recommends diminishing the UFG allowance by a small amount within the upcoming five-year period.
The recommendation would cut the benchmark allowance for both companies to 6.5% in FY 2027, 6.3% in FY 2028, 6% in FY 2029, 5.8% in FY 2030, and 5.5% in FY 2031.
SNGPL would receive an extra local challenge allowance of 0.5 percentage points under the proposal, while SSGCL would get 1.7 percentage points. SNGPL’s UFG allowance will reach 7% for FY 2027 and drop to approximately 6% by FY 2031, while SSGCL will have UFG allowances of 8.2% for FY 2027 and 7.3% by FY 2031.
The existing system-loss allowance, which gas prices currently include, amounts to 7.6% with a 2.6% performance-based UFG allowance included within that total.
SNGPL reports its actual UFG losses at 8.8% while SSGCL shows UFG losses of 13.6%. The consultant identified two problems with the pricing system for re-gasified liquefied natural gas because there is no specific benchmark that determines transmission and distribution losses associated with RLNG.
The existing method uses the previous year’s average indigenous gas UFG data, which has resulted in a price increase for RLNG sales that amounts to approximately Rs. 1,500 per million British thermal units, which brings the price close to the domestic gas price.
The tariff review process will receive close attention from both industry representatives and household members because Pakistan is attempting to decrease energy-sector losses through this process without causing additional inflationary effects.
