Ogra notifies gas tariffs for captive power plants

ISLAMABAD: The government has raised gas tariffs for captive power plants by Rs250 per MMBTU, under guidance from the International Monetary Fund (IMF), effective July 1, 2024.

The Oil and Gas Regulatory Authority (OGRA) announced the revised rate of Rs3,000 per MMBTU on Monday, citing IMF directives. This increase applies specifically to General Industry Captive power, which involves industrial units generating electricity primarily for internal use, with potential sales to distribution companies or bulk consumers.

The decision aligns with Section 8(3) of the OGRA Ordinance, 2002, granting authority to set gas prices based on socio-economic and sectoral policies. The IMF advocated for this hike due to inefficiencies in captive power plants (CPPs), which operate at low efficiency and waste natural gas, contributing significantly to Pakistan’s circular debt.

Projected to generate over Rs100 billion in fiscal year 2025, the tariff adjustment aims to alleviate Pakistan’s nearly Rs3 trillion circular debt. The Petroleum Division has directed OGRA to collaborate with gas companies to utilise surplus revenue for debt reduction.

IMF recommendations also emphasise integrating CPPs into the national grid to optimise resource utilisation. The recent tariff hike is part of broader government efforts to adhere to IMF guidelines, including biannual gas tariff adjustments to prevent future debt accumulation.

The government’s fiscal strategy for 2024-25 focuses on using generated revenue rather than subsidies to address sectoral losses, reflecting a commitment to fiscal discipline and energy sector reform.