ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA) has approved an increase in gas tariffs for consumers of both Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) for the fiscal year 2025–26.
The revised tariffs have been submitted to the federal government for category-wise notification, as required under existing regulations. Legally, the government must issue this notification within 40 days of OGRA’s decision.
According to a statement by OGRA, the regulator has determined the Estimated Revenue Requirements (ERR) for both companies under Section 8(1) of the OGRA Ordinance, 2002. These findings, issued on May 20, 2025, are now awaiting formal pricing advice from the federal government under Section 8(3).
SSGCL had proposed raising the average prescribed gas price to Rs 2,398.90 per MMBTU, but OGRA approved an increase of only Rs 103.95, bringing the new average to Rs 1,762.51 per MMBTU. Similarly, SNGPL requested a Rs 707.37 per MMBTU hike but was granted a smaller increase of Rs 116.90 per MMBTU.
The surge in SNGPL’s pricing is mainly attributed to the impact of re-gasified liquefied natural gas (RLNG) diversion, as mandated by the federal cabinet’s decision on October 30, 2023.
Recognizing the rising RLNG diversions and their effect on pricing structures, OGRA directed SNGPL to consult with the federal government to reassess gas supply management. The review should take into account sectoral energy demands, international contractual obligations, and broader economic considerations.
OGRA emphasized that existing gas prices will stay in place until the federal government issues the revised notification.
SNGPL reported a decline in domestic and commercial gas consumption, attributing it to price hikes, which have prompted shifts in usage patterns. Elevated RLNG tariffs, increased system gas costs, and additional levies on captive power plant (CPP) users have pushed many industrial consumers to switch to the national power grid or other energy sources.
Gas consumption by the power sector has also dropped significantly—from 66% to 33%—leading to a reduction of 150 MMCFD. This decline is largely due to the growing use of solar energy and alternative fuels that offer a cost-effective substitute for expensive RLNG.
SNGPL further explained that reduced availability of indigenous gas is the result of 1,000 MMCFD of RLNG being locked into firm government-to-government contracts. Failing to honor these commitments could trigger take-or-pay penalties and even risk sovereign default.
At the same time, RLNG demand has decreased due to lower consumption by CPP users and the power sector, prompting gas supply curtailments to protect the integrity of the distribution system.
