Ogra Notifies Massive Hike in Gas Prices

Muhammad Haris

The Oil and Gas Regulatory Authority (Ogra) notified a huge increase in gas prices, over 700 percent for various consumer groups, starting February 1, 2024. This came after the cabinet approved the hike.

For regular consumers, the increase is up to 67 percent. But for fertilizer, it’s a massive over 700 percent hike, which will lead to much higher urea prices for farmers.

The decision to raise fertilizer gas prices came after the caretaker government stopped providing subsidies. This move was triggered by urea manufacturers hiking urea prices and making huge profits.

Interestingly, the Economic Coordination Committee (ECC) sent a case of unfair urea price hikes to the Competition Commission of Pakistan (CCP) for investigation.

Previously, gas for fertilizer manufacturing was subsidized at Rs 200 per MMBtu, but now it’s going up to Rs 1597 per MMBtu, starting March 2024.

Domestic Consumers:

• Gas prices increased from 5% to 67%.
• Fixed monthly charges for protected consumers: Rs 400, with a meter rent of Rs 40 per month.
• For non-protected consumers:
• Up to 1.5 hm3: Rs 1,000 per month.
• Above 1.5 hm3: Rs 2,000 per month, with a meter rent of Rs 40 per month.

Fertilizer Sector:

• Massive hike of 714% for Engro feedstock, from Rs 197/MMBtu to Rs 1597/MMBtu.
• For Fauji Foundation Bin Qasim Limited: Rs 1017/MMBtu hike, from Rs 580/MMBtu to Rs 1597/MMBtu.
• Minimal hike of Rs 17/MMBtu (1.07%) for fuel supply to the fertilizer sector.

Export Industries

• Hike of Rs 50/MMBtu (2.38%) for process, from Rs 2100/MMBtu to Rs 2150/MMBtu.
• Tariff reduced by Rs 50/MMBtu (2.27%) for non-export industries, from Rs 2200/MMBtu to Rs 2150/MMBtu.

Other Industries

• For Engro Fertilizer (new plant), the tariff is effective from March 1, 2024, after the concessionary period expires.
• Liberty Power: Increase of Rs 101/MMBtu (3.50%), from Rs 2889/MMBtu to Rs 2990/MMBtu.
• Cement industry: Price remains unchanged at Rs 4400/MMBtu.

CNG Sector

• Hike of Rs 150/MMBtu (4.17%), from Rs 3600/MMBtu to Rs 3750/MMBtu.

Commercial and Power Sectors

• Commercial: Rs 3900/MMBtu.
• Special Commercial (Roti Tandoor): Rs 700/MMBtu.
• Power (KE, SNPC, EPQL): Rs 1050/MMBtu.

The increases in gas prices were implemented to meet the Estimated Revenue Requirement (ERR) of Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL) for the fiscal year 2023-24.

Earlier, the economic coordination committee (ECC) had decided that the revision of the sale price/ tariff should be consistent with the revenue requirements of the Sui companies.

According to the statement, the Petroleum division tabled a summary regarding “Natural Gas Sale Pricing FY 2023-24 to take effect from February 1, 2024).

The ECC deliberated upon this at length.

After discussion, ECC decided that the revision of the sale price/ tariff should be consistent with the revenue requirements of the Sui companies.

The committee recommended uniform gas prices for fertilizer plants.

The Sui Southern Gas Company Ltd (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL) are public-sector gas utility companies licensed by the Oil & Gas Regulatory Authority (Ogra) for gas purchase, transmission, distribution, and sales to consumers in Pakistan. Ogra determines its annual revenue requirements based on license conditions and regulations.

Recently, Ogra issued a determination for the Review Estimated Revenue Requirements (RERR) for FY 2023-24, with SNGPL requiring Rs. 592 billion and SSGCL requiring Rs. 310 billion. This totals Rs. 902 billion at an average price of Rs. 1,596/MMBtu.

Proposals were submitted to the Economic Coordination Committee (ECC) of the Cabinet for consideration.

Additionally, Ogra is required to verify RLNG diversion volumes to address revenue shortfalls and submit a final report within 60 days.

Probe against Urea Manufacturers

ECC directed the Competition Commission of Pakistan to investigate the undue increase in urea price during the recent past and fix the responsibility. ECC also directed the Ministry of Industries to ensure the stability of Urea prices in the market.