The Oil and Gas Regulatory Authority (OGRA) has approved an increase of up to 7% in natural gas prices for the fiscal year 2025–26. The decision aims to enable Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL) to meet a massive combined revenue requirement of Rs. 886 billion. This adjustment is expected to play a central role in fulfilling Pakistan’s commitments to the International Monetary Fund (IMF) and ensuring financial stability within the gas sector.
The determination has been forwarded to the federal government, which now holds the authority to notify the final consumer-end gas prices.
SSGCL Receives a 7.11% Increase in Prescribed Price
OGRA set SSGCL’s new average revenue requirement at Rs. 370 billion, up from Rs. 354 billion in the previous determination. This revision comes with an increase in the utility’s prescribed price to:
- Rs. 1,777 per mmBtu (previously Rs. 1,659 per mmBtu)
- Increase of 7.11%
- Rise of Rs. 118 per mmBtu
These adjustments are crucial for SSGCL to maintain its infrastructure, supply chain, and operational capacities at a time when the circular debt in the gas sector continues to grow.
SNGPL Granted a 5% Increase in Gas Prices
For SNGPL, OGRA approved a revenue requirement of Rs. 516 billion for 2025–26. The regulator fixed the company’s new prescribed price at:
- Rs. 1,853 per mmBtu (up from Rs. 1,766 per mmBtu)
- Increase of 5%
- Rise of Rs. 87 per unit
This ensures that SNGPL can recover its operational costs and meet revenue obligations, especially after the government’s earlier decision to raise fixed gas charges by 50% for all domestic consumers.
New OGRA-Approved Prescribed Prices for 2025–26
| Gas Company | Previous Price (Rs./mmBtu) | New Price (Rs./mmBtu) | Increase | Revenue Requirement |
|---|---|---|---|---|
| SSGCL | 1,659 | 1,777 | 7.11% (Rs. 118) | Rs. 370 billion |
| SNGPL | 1,766 | 1,853 | 5% (Rs. 87) | Rs. 516 billion |
Government’s Previous Tariff Hikes to Meet IMF Targets
Earlier this fiscal year, the government approved substantial increases in both fixed charges and per-unit gas sale rates, primarily under IMF conditions:
Previous Increases Included
- 50% rise in fixed charges for all domestic slabs.
- Up to 17% increase in sale prices for industrial, power, and bulk consumers.
- Additional Rs. 85 billion burden shifted to consumers.
These earlier hikes were introduced to reduce circular debt and meet IMF structural benchmarks—particularly the requirement for semi-annual gas tariff adjustments.
Why Gas Prices Are Increasing Again
OGRA’s latest determination is driven by multiple financial and regulatory factors:
Key Reasons for the Increase
- Massive circular debt exceeding Rs. 3 trillion in the gas and power sectors.
- Rising operational and supply-chain costs for SNGPL and SSGCL.
- IMF’s condition for timely biannual tariff updates, including RLNG cost adjustments.
- Ensuring gas utilities achieve full cost recovery and maintain uninterrupted supply.
OGRA has repeatedly stressed that all consumer categories must at least pay the average cost of service, which currently stands at:
- Rs. 1,853/mmBtu for SNGPL
- Rs. 1,777/mmBtu for SSGCL
Government’s Next Steps: Notify New Consumer-End Prices
Under OGRA law, the federal government must:
- Respond within 40 days of receiving OGRA’s determination.
- Notify new prices in the Official Gazette.
- Ensure uniform gas tariffs are applied across Pakistan.
Notably, consumer-end gas prices are typically based on the higher of the two prescribed prices, which means the rate is likely to align with SNGPL’s revised cost of Rs. 1,853 per mmBtu. The difference generated becomes the Gas Development Surcharge (GDS)—a revenue tool for the provinces.
Impact on Consumers and Industry
With OGRA approving price hikes below the requests of gas companies (10.7% for SNGPL and 7.6% for SSGCL), the burden on consumers will still be significant.
Expected Impact
- Domestic users may face higher monthly bills, especially after the earlier increase in fixed charges.
- Industrial and commercial sectors will witness increased production costs.
- Power producers relying on gas may pass on additional charges to consumers through electricity tariffs.
- RLNG-based sectors will see price alignment according to international benchmarks.
OGRA’s decision to raise natural gas prices by up to 7% for the fiscal year 2025–26 marks another crucial step in Pakistan’s ongoing efforts to restore financial stability in the energy sector and comply with IMF obligations. The final burden on consumers will depend on how the federal government chooses to apply these prescribed prices in its official tariff notification.
