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Express Tribune
21 hours ago
- Business
- Express Tribune
Govt raises gas prices by 10% for commercial users
Finance Minister Muhammad Aurangzeb chairs the Economic Coordination Committee meeting of the Cabinet on Friday, June 27, 2025. Photo: APP In line with structural benchmarks set by the International Monetary Fund (IMF), the Economic Coordination Committee (ECC) of the Cabinet on Friday approved a new natural gas pricing framework, including an average 10 per cent tariff hike for bulk, industrial and power sector users. Meanwhile, to shield domestic users from additional burden, the ECC decided to maintain existing gas prices for households while allowing an upward revision of fixed charges in the domestic sector to recover asset costs. Chaired by Finance Minister Muhammad Aurangzeb, the ECC also approved a summary moved by the Petroleum Division for a revised pricing structure to take effect from July 1, 2025, under the fiscal year 2025–26. Under the new framework, the government will notify revised consumer gas prices within 40 days of a determination by the Oil and Gas Regulatory Authority (OGRA), as required under the OGRA Ordinance. Read More: OGRA greenlights hike in gas price The pricing mechanism is aimed at ensuring cost recovery, regulatory compliance, and fulfilling IMF commitments, including rationalising captive power tariffs and replacing cross-subsidies with targeted support for low-income consumers. In other decisions, the ECC gave in-principle approval to a risk coverage scheme for small farmers and underserved areas, set to launch on August 14. The scheme aims to bring 750,000 new borrowers into the formal financial system through agricultural loans of up to Rs750,000. A total of Rs300 billion in new agricultural lending will be disbursed over the next three years. For risk coverage and administrative costs of banks, Rs37.5 billion will be required between FY2027 and FY2031. Also Read: Double-digit fuel inflation looms The ECC also approved a Rs15.839 billion technical supplementary grant (TSG) for the Ministry of Defence to meet a shortfall in employee and non-employee-related expenditures. The allocation covers dues under the Prime Minister's package for the families of martyrs from the recent Pakistan-India conflict. Additionally, the committee considered a proposal from the Ministry of National Food Security and Research for the import of sugar to stabilise domestic prices. The meeting was attended by Minister for Power Sardar Awais Leghari, Minister for Petroleum Ali Pervaiz Malik, and Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan, among other senior officials.
Express Tribune
20-05-2025
- Business
- Express Tribune
OGRA greenlights hike in gas price
The Oil and Gas Regulatory Authority (OGRA) has approved an increase in gas prices for consumers of Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) for the fiscal year 202526. The regulator has forwarded its decision to the federal government for formal notification of category-wise consumer gas prices. Under the law, the federal government is bound to issue the notification within 40 days of OGRA's decision. In a statement, OGRA said that under Section 8(1) of the OGRA Ordinance, 2002, it had determined the estimated revenue requirements (ERR) of both SSGCL and SNGPL through its decisions dated May 20, 2025. The determinations have been submitted to the federal government for category-wise natural gas sale price advice, as required under Section 8(3) of the same ordinance. SSGCL had sought an increase in the average prescribed gas price to Rs 2,398.90 per MMBTU, but OGRA approved a raise of Rs 103.95 per MMBTU. Currently, SSGCL's average prescribed price stands at Rs 1,762.51 per MMBTU. Similarly, SNGPL requested an increase of Rs 707.37 per MMBTU; however, the regulator allowed only Rs116.90 per MMBTU. The rise in SNGPL's prescribed price primarily stems from the impact of the re-gasified liquefied natural gas (RLNG) diversion in line with the federal cabinet's decision dated October 30, 2023. Noting the consistently rising RLNG diversion and its influence on pricing, OGRA directed SNGPL to immediately engage with the federal government to review gas supply management. The authority advised the review to consider sectoral energy demand, international contractual obligations and macroeconomic factors. OGRA reiterated that until revised sale prices are advised by the federal government and formally notified, the existing category-wise gas prices will remain in effect. SNGPL has informed OGRA that declining domestic and commercial gas consumption is largely due to price increases that have altered usage patterns. High RLNG tariffs, increased system gas prices, and a levy on captive power plant (CPP) users have driven industrial consumers towards the national grid or alternative fuels. Moreover, gas offtake by the power sector has decreased significantly, from 66% to 33%, over the past few years, leading to a reduction of 150 MMCFD in consumption. The drop is attributed to greater reliance on solar energy and other alternative fuels, which are reducing dependency on expensive RLNG. SNGPL also explained that curtailment of indigenous gas supplies is due to 1,000 MMCFD of RLNG being locked under firm government-to-government agreements. Failure to lift the committed volume could result in heavy take-or-pay (TOP) penalties and potential sovereign default. Meanwhile, demand for RLNG has dropped owing to reduced consumption by CPP users and the power sector. Curtailment of indigenous gas has also been undertaken to maintain system integrity.
