Gas utilities seek steep price hikes to meet Rs77bn shortfall in FY26

ISLAMABAD: Pakistan’s two state-run gas utilities — Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC) — have sought massive hikes in prescribed gas prices for fiscal year 2025-26, citing a combined shortfall of over Rs77 billion to cover rising costs and system inefficiencies.

Both the companies have separately filed their petitions to Oil and Gas Regulatory Authority (Ogra) to review its estimated revenue requirements/prescribed prices for FY2025/26. SNGPL, which serves Punjab and Khyber Pakhtunkhwa, has demanded an increase of Rs189 per million British thermal units (MMBTU), raising its average prescribed price to Rs1,955.50 per MMBTU from the current Rs1,766.50. The company projects a revenue shortfall of Rs52.958 billion for the fiscal year 2025/26, driven by higher imported RLNG costs, operating expenses, and depreciation.

Meanwhile, SSGC that supplies gas to Sindh and Balochistan under SSGCL’s network has sought a Rs125.41 per MMBTU increase, requesting an average prescribed price of Rs1,783.96 per MMBTU compared with the current Rs1,658.55. The southern utility reported a projected shortfall of Rs24.049 billion and attributed the demand mainly to escalating gas purchase costs, depreciation and financial charges.

The petitioner has also claimed Rs34.249 billion (Rs178.59 per MMBTU) related to previous years’ unrecouped shortfall as part of the petition. Accordingly, the aggregate average prescribed price has been claimed at Rs1,962.55 per MMBTU. Both utilities submitted their petitions to OGRA on October 15, 2025, under Section 8(2) of the Oil and Gas Regulatory Authority Ordinance, 2002, and Rule 4(3) of the Natural Gas Tariff Rules, 2002. The regulator will hold separate public hearings in November to review and determine the justifiability of these proposed revisions.

Ogra has invited all interested and affected stakeholders, including gas consumers and members of the public, to submit comments and intervention requests ahead of the hearings. The public hearing for SSGC is scheduled for November 11 in Karachi, while SNGPL’s case will be heard on November 7 in Lahore.

SNGPL’s petition noted that it has included the cost of RLNG diverted to indigenous gas consumers and a subsidy of Rs2.08 per MMBTU for its LPG AirMix Project. The company estimates RLNG service costs at Rs316.64 per MMBTU. SSGC, meanwhile, has included a similar subsidy of Rs13.48 per MMBTU and an RLNG service cost of Rs57.87 per MMBTU. Both utilities argued that the increase is necessary to recover the growing cost of gas linked to international crude and fuel oil prices, in line with existing agreements between the federal government and gas producers. If approved, the proposed hikes are expected to further strain household and industrial consumers already burdened by inflation and rising energy tariffs.