ISLAMABAD: Criticising the IMF-led gas disconnection of industrial captive power plants, the Oil and Gas Regulatory Authority (Ogra) on Tuesday determined about 6.6 per cent (Rs117 per unit) increase in prescribed natural gas prices to meet about Rs890 billion revenue requirement of the two gas companies during 2025-26.

In a late-night determination sent to the federal government, Ogra worked out the average revenue requirement for Karachi-based Sui Southern Gas Company Ltd (SSGCL) at Rs354bn for the next fiscal year and determined its prescribed price at Rs1,659 per million British thermal unit (mmBtu) or about Rs104 per unit reduction from Rs1,762 per mmBtu in FY25.

Conversely, the regulator worked out the revenue requirement for Lahore-based Sui Northern Gas Pipelines Ltd (SNGPL) at Rs535bn for FY26 and set its prescribed price at Rs1,895 per mmBTU, about Rs117 per unit higher than the current year’s Rs1,778 per unit to cover an estimated revenue shortfall of Rs43bn next year.

The average consumer gas prices currently stand at Rs1,770 per unit, which means the government would have to increase consumer gas rates by Rs125 per unit or about 7pc to Rs1,895 with effect from July 1.

Under the practice in vogue, the government has to adopt higher per unit cost of the gas company for uniform consumer-end tariff i.e. in this case Rs1895 per unit for SNGPL. The difference between the applicable consumer rate and lower determined prescribed price of the other gas company then becomes the gas development surcharge – a source of revenue for provincial governments based on their quantum of gas production.

Ogra stated that SSGCL and SNGPL determinations have been sent to the federal government for category-wise natural gas sale price advice as required under Section 8(3) of the Ogra Ordinance. The government has the right to change the consumer rates recommended by Ogra in a manner that it did not affect the revenue requirements worked out by the regulator.

Published in Dawn, May 21st, 2025