The Oil and Gas Regulatory Development Authority (OGRA) on Monday notified an increase in gas prices for all categories of consumers, including domestic, industry, commercial and power generation.
The notification of gas price adjustment was a structural benchmark under the ongoing $7 billion Extended Fund Facility (EFF) with the International Monetary Fund (IMF). Under the staff-level agreement, the revision was required to go into effect either before or on July 1, 2025.
Last week, the Economic Coordination Committee (ECC) of the federal cabinet approved a summary of the Petroleum Division for a revised natural gas pricing structure for fiscal year 2025–26. The ECC decided to maintain gas prices to protect household consumers with only fixed charges re-adjusted in domestic sector to recover asset costs. It also allowed increase in price of gas for bulk consumers, power plants operating on natural gas and industry by an average value of around 10%.
Domestic consumers
Under OGRA’s notification, the fixed charge for domestic consumers would increase by 50-100%. For protected consumer, charges have been raised from Rs. 400/month to Rs. 600/month, while for non-protected consumers, fixed charges have been raised from Rs. 1,000 to Rs. 1,500 for consumption up to 1.5hm3 and to Rs. 3,000 for consumption over 1.5hm3.
Both Sui companies have a combined customer base of 10.5 million and Topline Securities has estimated that they would collect Rs. 39.9 billion additional revenue due to this increase. Company-wise, Sui Northern Gas Pipelines Limited would collect Rs. 29 billion, while the Sui Southern Gas Company would collect Rs. 10.9 billion.
Domestic bulk consumers
ORGA has hiked the domestic bulk gas tariff by 9.5% to Rs. 3.715/mmbtu. The move aims to generate Rs. 4 billion in additional revenue. According to OGRA, the total consumption of domestic bulk is around 40mccfd, or 3% of total natural gas supplied through the Sui companies.
General industry
The tariff for general industry (processing) has been increased by 7% to Rs. 2,300/mmbtu. This is expected to generate additional revenue of Rs. 10 billion, comprising Rs. 8 billion for the SSGC and Rs. 2.2 billion for SNGPL. Processing Industry consumes 12-13% of the natural gas supplied through the Sui network.
The increase would prove slightly negative for the textile industry, which uses natural gas for processing purposes. However, Topline estimates, the impact would vary by company, as some major players are already using alternative sources for processing.
Power generation
Under the revised structure, power generation companies would now receive natural gas at Rs. 1,225/mmbtu, generating an estimated Rs. 9.5 billion in additional revenue.
Total additional collection after the hikes stands at Rs. 63.3 billion, according to Topline. Of this, Rs. 36 billion would go to SNGPL, while Rs. 28 billion would go to SSGC.