Gas utilities seek 21-121pc tariff hike

“• Hearings set for May 12-13 in Lahore and Karachi • Consultant proposes a nominal cut in UFG allowance ISLAMABAD: An independent consultant, hired by Oil and Gas Regulatory Authority (Ogra), has proposed a nominal scale-down in the billing of unaccounted-for-gas (UFG) losses to gas consumers over the next five years, as the two gas utilities seek about 21 and 121 per cent increases in the prescribed tariffs to meet their revenue requirements for 2026-27. Ogra has called public hearings on May 12 and 13 in Lahore and Karachi to consider petitions from the Sui Northern Gas Company Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL). Ogra had earlier postponed the public hearings on April 21 and 22 on the premise that gas prices, particularly LNG prices, had become unpredictable given the ongoing crisis in the Middle East. However, the law required the regulator to issue its determination at least 40 days before June 30, allowing the government to propose any changes to the consumer tariff. The government has also committed to the International Monetary Fund (IMF) to provide timely biannual notifications of gas rates to avoid a further build-up of circular debt, which has already exceeded Rs3 trillion. The gas tariff must be revised with effect from July 1. On Monday, it was disclosed that independent consultant KPMG Taseer Hadi & Co has suggested scaling down the UFG allowance in the gas tariff to 6.5pc for FY27, 6.3pc for FY28, 6pc for FY29, 5.8pc for FY30 and 5.5pc for FY31 for both utilities. In addition, SNGPL would be given an additional allowance of 0.5pc for local challenges and 1.7pc for SSGCL. This will take SNGPL’s UFG to 7pc for FY27 and about 6pc for FY2031 while SSGCL’s UFG allowance would be in the range of 8.2pc for FY27 and 7.3pc for FY31. At present, the system loss allowance in the prescribed gas prices stands at about 7.6pc, including a 2.6pc performance-based UFG allowance. The actual UFG losses for SNGPL stand at 8.8pc compared to 13.6pc for SSGCL. The consultant, hired by Ogra, also highlighted that, under the Economic Coordination Committee (ECC) decision of 2016, transmission loss was to be determined and charged at actual, subject to a maximum of 0.5pc (to be shared by gas companies based on the length of the transmission line involved), while distribution loss was to be determined and charged at actual. The decision further provided that such loss for customers located on high-pressure transmission lines, as well as for those willing to lay dedicated lines from SMS/TBS, shall also be determined and charged at actual. For other customers on distribution lines, the actual average UFG for the last financial year will be used in the determination. “Currently, there is no benchmark for UFG incurred in transmission or distribution of RLNG; instead, last year’s actual average UFG of indigenous gas is allowed for the purpose of RLNG pricing,” which has practically increased the RLNG sale price by around Rs1,500 per million British thermal unit (mmBtu), almost equivalent to the prescribed price for domestic gas. SNGPL has requested that the prescribed price of Rs1,853 per mmBtu be increased to Rs2,084 next fiscal year, including the cost of LNG diversion. Published in Dawn, May 5th, 2026

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