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Gas price to hike by 50%

The Petroleum division submitted a summary of the gas price hike to the caretaker cabinet: Sources.



Gas price to hike by 50%
GNN Media: Representational Photo

Islamabad: The caretaker cabinet has received a proposal for a substantial gas price hike of up to 50%.

According to sources within the Petroleum Division, at the urging of the International Monetary Fund (IMF), the division has once again submitted a proposal to the caretaker cabinet for a significant increase in gas prices, potentially affecting 12 consumer categories this month.

Sources suggest that following cabinet approval, the Petroleum Division will release an official notification detailing the new gas sale prices by category, effective from July 1, 2023.

Notably, the Oil and Gas Regulatory Authority (OGRA) had earlier suggested a 50% reduction in gas prices for customers of Sui Northern Gas Pipeline Limited (SNGPL) and a 45% decrease for Sui Southern Gas Company (SSGC) clients.

Subsequently, a price hike was recommended.

The caretaker Energy Minister, Muhammad Ali, recently asserted that an increase in gas prices ahead of winter was inevitable to curb the mounting debt in the gas sector, which is escalating at a rate of 350 billion rupees annually.

The gas sector is already grappling with significant debt, including 2.7 trillion rupees in interest.

The IMF has also pressed for the implementation of the Average Cost of Gas (WACOG) to fully recover RLNG prices from domestic consumers.

From July 2018 to April 2023, SNGPL is set to receive Rs 245 billion in RLNG diversion to the domestic sector.

As per OGRA's decision, SNGPL and SSGC have been allowed to collect an estimated revenue requirement (ERR) of Rs 697.4 billion from gas consumers in 2023-24.

SNGPL is responsible for collecting Rs 358.4 billion, while SSGC will manage Rs 339 billion.

This price adjustment essentially encompasses 85% of the fixed gas price, with the average fixed price of SNGPL expected to increase by 50%, or Rs 415.11, and SSGC's average fixed price to rise by 45%, or Rs 417.23.