Hiked gas tariff announced by Ogra

ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA), in accordance with the federal government policy guidelines, has announced revised natural gas sale prices effective from November 1, 2023.

This change comes following the federal government’s advice, as per OGRA Ordinance, to adjust natural gas sale prices while considering socioeconomic factors and sectoral policies.

On October 23, 2023, the interim cabinet had approved a significant gas price increase of up to 194 per cent, which was implemented on November 1. The monthly charges for domestic protected consumers rose sharply from Rs10 to Rs400. For non-protected consumers, charges were divided into two tiers, with the first category (up to 1.5 hm3) increasing from Rs460 to Rs1,000, and the second category (above 1.5 hm3) rising from Rs460 to Rs2,000.

While the protected consumers saw no change in their tariff, their fixed monthly charges increased from Rs10 to Rs400, resulting in a potential 150 per cent annual bill increase. Residential consumers not under protection will experience significant gas rate increases of 50 per cent to Rs300 per MMBTU for up to 0.25 hcm, double to Rs600 per MMBTU for 0.6 hcm, and a 150 per cent increase to Rs1,000 for up to 1 hcm. The most substantial increase, a 173 per cent hike, occurred for consumption up to 3 hcm, raising prices to Rs3,000 per MMBTU from Rs1,100. Bulk consumption tariffs increased by 25 per cent to Rs2,000 per MMBTU, while the special commercial category (tandoor roti) remained unchanged at Rs697 per MMBTU.

Commercial consumers experienced a substantial tariff hike of over 136 per cent, with rates rising to Rs 3,900 per MMBTU. Cement factories and CNG stations will see an increase of more than 193 per cent and 144 per cent, respectively, bringing the tariff to Rs4,400. The tariff for export industries increased by 86 per cent to Rs2,050 per MMBTU, while non-export industries faced a 117 per cent increase to Rs2,600.

The Ogra noted that Pakistan’s gas reserves were depleting at a rate of 5-7% annually, with an increasing dependence on expensive imported fuel. The devaluation of the rupee against the dollar and general inflation have raised gas costs across exploration, production, distribution and transmission.

In the past, inadequate gas pricing and a lack of financing for imported gas diversion led to a circular debt stock of Rs2.1 trillion (without interest). Some profitable businesses have enjoyed the cheapest natural gas, enriching certain sectors while leaving the lowest-income classes, including poor farmers and small-scale industries, disadvantaged.