OGRA drops gas bomb: Tariff hiked up to 74% from July 2022

• Gas tariff increased on SNGPL, SSGC pleas filed in November 2022.
• Poor consumers are most affected as their gas prices have tripled.
• Tariff increased by 67.75% for SSGC consumers.

ISLAMABAD: Amid biting inflation and shrinking purchasing power, the Oil and Gas Regulatory Authority (OGRA) has dropped a gas bomb on the masses as it increased the tariff for consumers of two sui gas companies by up to 74%, effective from July 2022.

The regulator, in a notification issued on Wednesday, hiked the tariff of Sui Northern Gas Company Limited (SNGPL) and Sui Southern Gas Company (SSGC) for household consumers, commercial sector, tandoors, captive power plants and general industries, including export-oriented sector.

Interestingly, the regulator has abolished the earlier applicable slabs of gas consumption and their respective rates and fixed the price at 952.17 per Million British Thermal Units (mmBtu) for SNGPL consumers. Likewise, for SSGC, the prescribed prices have been fixed at Rs1161.91/mmBtu.

Having a cursory look at the decision, lower slabs who consume less and are almost poor consumers are most affected as their gas prices have tripled, while for the higher slabs, the prices have been literally reduced.

The regulator issued its decision after holding public hearings on the petitions of SNGPL and SSGC in November 2022, where both companies had demanded a substantial increase in their prescribed gas prices for the current FY23 to help them meet revenue requirements.

SNGPL, operating the gas network in Punjab and Khyber Pakhtunkhwa, sought Rs1,294.02/mmBtu, and SSGC which feeds Sindh and Balochistan sought Rs667.44/mmBtu increase.

According to the latest decision of OGRA on their petitions, the prescribed gas prices for SNGPL have been increased by 74.42% while for SSGC, it has been increased by 67.75%.

In absolute terms, for SNGPL the average price has been increased by Rs406/mmBtu to Rs952.17/mmBtu. For SSGC too, the gas price has been enhanced by Rs469/mmBtu to Rs1,161.95/mmBtu.

The regulator has sent its decision to the federal government.

Now, the government would decide on it within 40 days of this notification. If the government does not notify it, then it will automatically come into effect.

For domestic consumers, the prescribed prices for the lowest slab, which was earlier Rs121/mmBtu, has now been increased to 952.17/mmBtu depicting an increase of 687%. For the next slab, it has been increased from Rs300/mmBtu to Rs952.17/mmBtu.

Interestingly, for the highest two slabs, the prices have been reduced after fixing the rate at Rs952.17.

Earlier, the second slab was paying Rs1,107/mmBtu and the last one was paying Rs1,460/mmBtu. Now comparing these prices with the new prices, there is a sizeable reduction in gas prices for rich consumers.

Similarly, for commercial consumers (tandoor), the five slabs have been abolished, and the rate has been fixed at Rs952.17/mmBtu. Earlier, the tandoors’ gas tariff was Rs110/mmBtu for the lowest slab and Rs700 for the highest slab.

For the export-oriented sector (general industries), the price has been increased from the existing Rs819 to Rs952.17/mmBtu.

For the captive power plants, the gas price has been increased from Rs852 to Rs952.17. Interestingly, prices for CNG, cement and fertiliser sectors have been reduced.

For the SSGC consumers, slabs have been abolished and the prices fixed at Rs1161.91/mmBtu.