Pakistan's state-owned companies seek fresh gas price hikes of up to 11% for FY26

Gas consumers across Pakistan should brace for another round of tariff hikes, as both state-owned utilities—Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL)—have filed fresh petitions seeking substantial increases in gas prices for the fiscal year 2025-26 to meet their growing revenue requirements.

The Oil and Gas Regulatory Authority (Ogra) confirmed that it will hold public hearings next month to consider the utilities’ requests. A hearing on SNGPL’s petition is scheduled for November 7, followed by SSGCL’s on November 11.

SNGPL, which serves Punjab and Khyber Pakhtunkhwa, has requested a PKR 189 per million British thermal units (mmBtu) increase, equivalent to a 10.7% hike in its prescribed price.

The company has sought to raise its average prescribed price from PKR 1,766.50 to PKR 1,955.50 per mmBtu.

According to its filing, SNGPL estimated a PKR 52.95 billion shortfall in its revenue requirements for FY2025-26, in addition to a PKR 582 million subsidy shortfall related to its LPG air-mix project.

It has also claimed an additional PKR 317 per mmBtu cost related to the diversion of re-gasified liquefied natural gas (RLNG) to domestic consumers.

The company said the combined impact of these adjustments would raise its total cost by nearly 28.7% to PKR 2,272 per mmBtu.

SNGPL argued that the inclusion of RLNG costs had been approved by the Economic Coordination Committee and ratified by the federal cabinet in October 2023.

Meanwhile, Karachi-based SSGCL, which supplies Sindh and Balochistan, has sought a PKR 125.41 per mmBtu increase, or about 7.6%, raising its average prescribed price from PKR 1,658.56 to PKR 1,783.96 per mmBtu for the current fiscal year.

The southern utility has projected a PKR 24 billion shortfall in its revenue requirements for FY26 and sought recovery of an additional PKR 34.25 billion in accumulated losses from previous years.

It said including those losses would raise its prescribed price to PKR 1,962.55 per mmBtu. SSGCL also cited PKR 57.87 per unit in additional RLNG service costs, bringing the total to PKR 2,021 per mmBtu.

Under Pakistani law, Ogra revises prescribed gas prices twice a year, after which the government sets end-user tariffs for various consumer categories.

The government has committed to the International Monetary Fund (IMF) that it will issue timely biannual tariff notifications to prevent further buildup of circular debt, which already exceeds PKR 3 trillion.

Earlier in June, Ogra had notified a significant gas price increase for domestic, commercial, and industrial consumers, effective July 1. That round of hikes saw domestic gas tariffs jump by up to 50% in certain categories, adding to inflationary pressures for households.

According to that notification, protected domestic consumers—typically lower-income households—were charged between PKR 200 and PKR 350 per mmBtu, while non-protected consumers faced steep rates ranging from PKR 500 to PKR 4,200 per mmBtu.

Fixed monthly charges were also imposed, with protected consumers paying PKR 600, and non-protected households between PKR 1,500 and PKR 3,000, depending on usage.

Institutional and commercial users, including government offices, hospitals, and schools, were charged PKR 3,175 per mmBtu, while commercial businesses paid PKR 3,900, and industrial users paid PKR 2,300. Rates for CNG stations were fixed at PKR 3,750, cement factories at PKR 4,400, and fertilizer plants at PKR 1,597 per mmBtu.

If approved, the new petitions by SNGPL and SSGCL could further raise gas prices across sectors already grappling with record inflation and rising energy costs.

The utilities argue that tariff adjustments are essential to cover imported gas costs and prevent future supply disruptions.

Ogra is expected to announce its determinations following the November hearings.