Govt Increases Gas Prices by 46%

The government has approved Oil and Gas Regulatory Authority’s (Ogra) recommendation to increase rates for natural gas by 46% on average. On Tuesday, petroleum division was ordered to take measures to curb gas theft, which amounts to Rs 50 billion on an annual basis.

The new government’s move came after two utility companies – Sui Southern Gas Company (SSGP) and Sui Northern Gas Pipelines (SNGP) – requested the government to implement the increase in gas price so that they could cover their deficits.

The companies informed that:

• SNGP’s receivables stand at Rs 165 billion since Aug 20 2018, as compared to Rs 171 billion in payables.
• SSGL’s receivables stand at Rs 203.5 billion, as compared to Rs 148.7 billion in payables.

A briefing on the gas sector was presided by the Prime Minister himself. He was briefed about the current situation regarding the supply and demand in the country’s oil and gas sector by Additional Secretary in charge of petroleum division Mian Asad Hayauddin.

PM Khan was told that constant changing, as well as non-implementation of oil and gas sector policies, has turned investors away. No exploration blocks were awarded during the last five years. PM Khan ordered that a comprehensive plan be drawn up to contest these issues.

He was also briefed about the steps required to rationalize the selling prices in the gas sector particularly. During this meeting, he asked for the statistics, as determined by OGRA, to be approved by the forum.

Before the first meeting of the Economic Coordination Committee (ECC) occurred last week, a summary for an increase in the gas tariff was placed in front of Federal Minister for Finance, Asad Umar. Mr Umar stated that it should be moved ahead for a decision after the approval of the prime minister.

Hence, an improved version of the summary will be put on the table in the next ECC meeting for approval. Then, a formal notification will be issued for a consumer-end gas price after taking the federal cabinet in confidence.

Gas Price Increase

Here are the new approved gas rates:

• Up to 186% increase in gas rates for low-end domestic and commercial consumers.
• Up to 27-31% increase for consumers belonging to these categories:
  • industrial
  • CNG
  • cement
  • power
  • commercial.
• 45% increase for Sindh and Balochistan (Rs 184.34 per unit)
• 3.37% increase in Punjab and KPK (Rs 629.33 per MBTU)
• Domestic and commercial consumers who use less than 100 cubic meters monthly will pay Rs 294.55 per unit, an increase of 180% from Rs 105.15 per unit.
• Those using up to 300 cubic meters per month (both commercial and residential) will have to pay Rs 589.09 per unit instead of Rs 210.31.
• Domestic consumers who use more than 300 cubic meters per month will be charged at Rs664.52 per unit instead of Rs 525.76 (26.4% increase). Commercial consumers will be charged Rs 797.42 per unit instead of Rs 631 per unit.
• There will be an increase of 24.6% on all other categories for larger commercial,  industrial, captive power, ice factories, CNG stations, fertilizer, cement plants, public sector powerhouses and IPPs (independent power plants).
• Rs 930 per unit will be imposed on cement factories instead of Rs 736. Fauji Fertilizer, Bin Qasim plants will now pay Rs 156 per unit instead of Rs 123.