Ogra notifies up to 143pc increase in gas prices

Updated 05 Oct 2018


New gas tariff aims to generate about Rs111 billion. ─ File
New gas tariff aims to generate about Rs111 billion. ─ File

ISLAMABAD: After three weeks of hiatus, the government on Thursday notified up to 143 per cent increase in natural gas tariff with the aim of generating about Rs111 billion.

The federal cabinet had approved the tariff increase on Sept 17. On Thursday, the Oil and Gas Regulatory Authority (Ogra) issued for the formal notification with back dated effect from Sept 27.

An official said the tariff was increased by an average 35pc even though they varied to various categories. The move would generate about Rs95bn for Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited and another Rs16bn to the federal government on account of general sales tax. The impact of Rs58bn – determined by the regulator but not passed on to consumers – would be carried forward in the next price adjustment, he said.

Speaking at a news conference on Thursday, Minister for Petroleum Ghulam Sarwar Khan said the substantial tariff increase was necessitated by a five year freeze imposed by the PML-N government.

According to the Ogra notification, the government also created seven slabs of residential consumers instead of existing three slabs. Domestic consumers falling in the two highest slabs would be worst off because they would be charged at the highest rate among all consumer categories. Their price has been equalised with imported LNG.

The price of 6th slab of up to 500 cubic meters and 7th slab of more than 500 units has been scaled up by 143.33pc to Rs1,460 per million British thermal unit (mmBtu) from Rs600.

The monthly gas bill of 500 cubic meters would surge from Rs12,500 to Rs30,340 and further up to Rs35,500 because of 17pc GST impact. Only two percent consumers or 226,129 fall in this category. Likewise, the monthly bill of more than 500 cubic meters would increase from Rs15,000 to Rs36,400 and further beyond 42,520 per month with addition of GST.

A new slab of 50 cubic meter monthly consumption was created. The gas rates for this slab were increased by 10pc from Rs110 per mmBtu to Rs121. The monthly bill excluding taxes would increase from Rs252 to Rs275. In normal circumstances (other than winters), 3.56 million or 38pc consumers fall in this slab, the minister said.

Published in Dawn, October 5th, 2018