OGRA goes for up to 74% hike in gas tariff, poor worst hit

It seems the pressure exerted by the IMF is working, the Oil and Gas Regulatory Authority (OGRA) went for increasing the tariff for the consumers across Pakistan by up to 74 percent with effect from July 2022.

However, the OGRA has sent its decision on the subject to the government which would have decide or review the move within 40 days. If the government does not notify it, then it will automatically come into effect.

The move comes as Prime Minister Shehbaz Sharif recently said they told the IMF that the government burden the poor as they were already a victim of alarming inflation. 

According to the decision taken on Wednesday, the gas price is hiked for Sui Northern Gas Company Limited (SNGPL) and Sui Southern Gas Company (SSGC) which covers all consumers – household, commercial, captive power plants and industries.

Moreover, the regulator abolished the earlier applicable slabs of gas consumption and their respective rates, fixing the price at 952.17 per million British thermal units (mmBtu) for the SNGPL and Rs1161.91/mmBtu for the SSGC.

And it is the poor who have to share the burden despite consuming consume less as the gas prices have been tripled for them while the rates are been literally reduced for the higher slabs.

The regulator issued its decision after holding public hearings on the petitions of SNGPL and SSGC in November 2022, where both companies had demanded a substantial increase in their prescribed gas prices for the current fiscal year to help them meet revenue requirements.

It represents an increase of 74.42 percent for SNGPL and of 67.75 percent in the case SSGC. In other words, the average price for SNGPL is increased by Rs406/mmBtu to Rs952.17/mmBtu by Rs469/mmBtu to Rs1,161.95/mmBtu for SSGC.

For domestic consumers, the prescribed prices for the lowest slab, which was earlier Rs121/mmBtu, has now been increased to 952.17/mmBtu, depicting an increase of 687 percent. Interestingly, for the highest two slabs, the prices have been reduced after fixing the rate at Rs952.17.

Earlier, the second slab was paying Rs1,107/mmBtu and the last one was paying Rs1,460/mmBtu. Now comparing these prices with the new prices, there is a sizeable reduction in gas price for rich consumers.

Similarly, for commercial consumers (tandoor), the five slabs have been abolished with the rate fixed at Rs952.17/mmBtu. Earlier, the tandoors’ gas tariff was Rs110/mmBtu for the lowest slab and Rs700 for the highest slab.

For the export-oriented sector (general industries), the price has been increased from the existing Rs819 to Rs952.17/mmBtu.

For the captive power plants, the gas price has been increased from Rs852 to Rs952.17. Interestingly, prices for CNG, cement and fertilizer sectors have been reduced.

For the SSGC consumers, the slabs have been abolished and the prices have been fixed at Rs1161.91/mmBtu.

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