Energy officials to seek PM nod on gas tariff hike

ISLAMABAD: The government will try to convince Prime Minister Shehbaz Sharif to approve a long-demanded as well as a massive hike in the tariff for both cash-strapped gas utilities of the country, The News learnt on Wednesday.

It was decided in a meeting chaired by Finance Minister Ishaq Dar and attended by former PM Shahid Khaqan Abbasi, Minister of State for Finance and Revenue Dr Ayesha Ghous Pasha, Minister of State for Petroleum Musadik Masood Malik, Tariq Bajwa SAPM, secretaries Finance, Petroleum and other senior officers.

Sui Northern and Sui Southern are facing a substantial financial burden of Rs600-700 billion because of no increase in gas prices for the last 3-4 years. Both gas companies can't procure gas at Rs1,000 per unit and sell it at Rs589.52 per MMBTU, sources believe.

“It was decided in the meeting that a special presentation would be made to Prime Minister Shehbaz Sharif seeking his approval to increase gas prices to provide monetary relief to both the gas companies,” one of the participants of the meeting told The News.

The official said various options for increasing the gas prices were discussed and the meeting agreed that those gas consumers using less gas monthly should be exempted from the raise.

And only those who consume maximum gas should be exposed to higher tariffs. However, to this effect, a comprehensive presentation would be prepared based on the proposals figured out in the meeting, for the PM's approval.

Afterwards, the Petroleum Division would take up the issue for ECC approval and then it would be placed in the federal cabinet for a formal notification.

The IMF also wants an increase in gas tariffs to avert the financial burden on the gas companies and to make the gas sector sustainable.

The OGRA had determined an increase in tariff by 40-45 per cent for the year 2022-23 on June 3, 2022, to meet the revenue requirements of both the gas utilities.

According to the amended OGRA ordinance, if the federal government fails to provide recommendations on category- and slab-wise gas prices to Ogra within 40 days, the prescribed prices determined by the authority would stand automatically notified and the gas utilities would be bound to charge the new rates.

The regulator had set an average prescribed for SNGPL at Rs854.52 mmBtu, up by Rs265 per unit or 45pc higher. Now instead of 40 days lapse, 4-months have passed but gas prices have not increased. Now the government will have to increase the price to Rs1000 to cover the backlog of four months. Likewise, OGRA had determined an average prescribed price for SSGCL at Rs699.30 per mmBtu, showing an increase of 40pc or Rs308 per unit.