Gas prices in Pakistan are likely to see a significant increase in the upcoming fiscal year, as the Oil and Gas Regulatory Authority (OGRA) begins reviewing tariff hike requests from the country’s two state-owned gas utilities.
OGRA has announced public hearings in Lahore and Karachi on May 12 and 13 to consider tariff petitions filed by Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited for FY 2026–27.
According to official documents, SNGPL has requested an increase in its prescribed tariff to Rs. 2,084 per mmBtu, up from the current Rs. 1,853, incorporating the cost of diverted LNG. SSGCL has sought an even higher tariff adjustment, though exact figures were not disclosed.
The hearings were earlier scheduled for April but were postponed due to volatility in global LNG prices linked to ongoing tensions in the Middle East. Under legal requirements, OGRA must announce its determination at least 40 days before June 30, allowing the government to implement revised gas prices from July 1.
The tariff revision also aligns with Pakistan’s commitments to the International Monetary Fund (IMF), which require timely biannual adjustments in gas prices to address the country’s growing circular debt, now exceeding Rs. 3 trillion.
Meanwhile, an independent consultant engaged by OGRA has proposed a gradual reduction in the allowance for unaccounted-for gas (UFG) losses over the next five years. The plan suggests reducing the benchmark UFG allowance to 6.5% in FY 2027, further declining to 5.5% by FY 2031.
Under the proposal, SNGPL would be allowed an additional 0.5% margin for operational challenges, while SSGCL would receive an extra 1.7%. This would set SNGPL’s UFG allowance at 7% in FY 2027, easing to around 6% by FY 2031. SSGCL’s allowance would stand at 8.2% initially, gradually falling to 7.3%.
Currently, the system-loss allowance built into gas tariffs is about 7.6%, while actual losses remain higher 8.8% for SNGPL and 13.6% for SSGCL.
The consultant also highlighted concerns over the pricing of re-gasified liquefied natural gas (RLNG), noting the absence of a separate benchmark for transmission and distribution losses. Instead, authorities use the previous year’s average indigenous gas UFG, a method that has increased RLNG prices by nearly Rs. 1,500 per mmBtu.
The outcome of the upcoming hearings will be closely monitored by businesses and consumers alike, as the government balances efforts to reduce energy-sector losses with the risk of further inflationary pressure.
