TFD Monitoring Desk
ISLAMABAD: Pakistan's two major state-owned gas utilities, Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), have submitted petitions to the Oil and Gas Regulatory Authority (OGRA) seeking upward revisions in their average prescribed gas prices for the current financial year, amid increasing fuel import costs, declining domestic gas production and concerns over winter supply shortages.
The proposed adjustments, if approved, would take effect retrospectively from July 1, 2026, although any changes in tariffs charged to consumers would require a separate government decision and notification.
According to the petitions, SNGPL has requested an increase of approximately Rs10 per million British thermal units (MMBtu), proposing an average prescribed price of Rs1,712.40 against its stated existing rate of approximately Rs1,702.
SSGC has sought a substantially larger adjustment of Rs366.75 per MMBtu, proposing a revised prescribed price of Rs2,071.75.
The requests reflect mounting financial and operational pressures on Pakistan's gas transmission and distribution system, particularly as the country prepares for increased demand during the winter months.
Rising LNG Costs Add to Financial Pressure
One of the major factors highlighted by SNGPL is the growing cost of imported liquefied natural gas (LNG), which has become an increasingly important component of Pakistan's energy supply arrangements.
The company has included Rs60.147 billion in LNG service costs in its proposed revenue requirements, estimating the cost at Rs471.16 per MMBtu.
SNGPL has maintained that limited availability of locally produced natural gas during winter will require additional LNG arrangements to maintain supplies for residential, commercial and industrial consumers.
According to the utility's assessment, approximately 16 LNG cargoes would be required during the winter season to help bridge the supply-demand gap.
Both gas companies have also cited rising international crude oil prices as a contributing factor behind their requests for higher prescribed rates.
Because a significant portion of LNG supply arrangements is linked to international energy prices, fluctuations in global oil markets can influence Pakistan's gas import costs and the financial requirements of domestic utilities.
Declining Domestic Production Deepens Energy Challenges
Pakistan's natural gas sector continues to face structural difficulties as production from mature domestic gas fields declines while demand remains substantial.
The reduced availability of indigenous gas has increased reliance on imported LNG, exposing the country's energy system to global price volatility, foreign exchange pressures and potential disruptions in international supply chains.
The situation has become particularly challenging amid uncertainty surrounding LNG shipments from Qatar and broader regional tensions affecting energy transportation and availability.
Any interruption in contracted deliveries could further complicate efforts to maintain adequate gas supplies during winter, when household consumption traditionally increases.
The government has already introduced supply management measures for domestic consumers in response to system constraints.
In September, gas availability for households was restricted to designated cooking periods during the morning, afternoon and evening, reflecting the inability of the distribution network to maintain uninterrupted supplies throughout the day.
Winter Gas Management Plan Under Preparation
The federal government is preparing a comprehensive gas management strategy covering November 2026 through February 2027 to address anticipated seasonal shortages.
Under the proposed arrangements, domestic consumers would receive priority in gas allocation, while supplies to industrial facilities, captive power plants, fertiliser manufacturers and compressed natural gas stations could face restrictions if severe shortages emerge.
According to Petroleum Division estimates, approximately 24 LNG cargoes would be required to meet winter demand on the SNGPL network, including the requirements of domestic consumers and electricity generation facilities.
The difference between the utility's assessment of 16 cargoes and the Petroleum Division's broader estimate of 24 cargoes reflects the need to distinguish between individual supply requirements and overall winter demand planning.
Pakistan's power sector remains an important consumer of regasified liquefied natural gas (RLNG), particularly at generation facilities designed to operate on imported fuel.
Any significant disruption in gas supplies could therefore create additional challenges for electricity generation, industrial productivity and energy sector planning.
Circular Debt Reaches Rs3.631 Trillion
Alongside supply concerns, Pakistan's gas sector continues to struggle with a growing circular debt burden that has weakened the financial position of energy companies.
According to figures presented by the Petroleum Division in the National Assembly, gas-sector circular debt increased by approximately Rs344 billion, reaching Rs3.631 trillion by June 30, 2026.
The continuing accumulation of unpaid liabilities has created difficulties for gas utilities, affecting their financial stability and adding pressure to the broader energy supply system.
The growing debt burden also raises concerns regarding the ability of companies to maintain infrastructure, meet contractual obligations and invest in improving transmission and distribution networks.
Energy sector analysts have repeatedly emphasised that tariff adjustments alone may not be sufficient to resolve these structural problems without improvements in recoveries, operational efficiency and financial management.
LNG Price Volatility Remains a Concern
Pakistan's dependence on imported energy has made the domestic market increasingly sensitive to international price movements and supply disruptions.
Earlier this year, OGRA increased RLNG prices by as much as 34.6 percent for July following reduced LNG cargo arrivals.
Only five LNG shipments reportedly reached Pakistan during that month, highlighting the difficulties associated with securing adequate fuel supplies under uncertain market conditions.
The latest petitions from SNGPL and SSGC underline the continuing financial implications of imported fuel dependence, particularly when international prices rise or the availability of cargoes becomes uncertain.
The situation has also renewed concerns over the long-term sustainability of Pakistan's energy pricing framework and the need to encourage domestic exploration, efficient consumption and diversification of energy sources.
Consumer Tariffs Will Require Separate Government Approval
Despite the proposed increases, the petitions do not automatically mean that household or industrial consumers will face immediate changes in their gas bills.
The average prescribed price represents the revenue requirement determined by OGRA for a gas utility, taking into account operating costs, supply expenses and other recognised financial obligations.
Actual tariffs charged to different consumer categories are determined through a separate process involving government policy decisions and official notifications.
In July, the federal government retained existing consumer gas tariffs despite OGRA's prescribed-price determinations for the two utilities.
Previous regulatory determinations had placed SNGPL's average prescribed price at Rs1,718.96 per MMBtu and SSGC's at Rs1,691.24 for the financial year 2026-27.
The latest submissions will undergo regulatory scrutiny, including public hearings, before OGRA issues its determinations.
Any subsequent revision in consumer gas prices will depend on the federal government's decisions and the applicable notification process.
Energy Reforms Remain Essential
The petitions come at a time when Pakistan is attempting to stabilise its energy sector while balancing the competing requirements of consumer affordability, industrial competitiveness and financial sustainability.
Higher gas costs could eventually affect households, manufacturing industries and electricity generation if the government decides to pass additional expenses on to consumers.
At the same time, maintaining artificially low tariffs without addressing the financial requirements of gas utilities could further increase unpaid liabilities and weaken the sector's financial position.
The central challenge for policymakers will be to establish a sustainable pricing and supply framework that protects vulnerable consumers while ensuring adequate investment in energy infrastructure and maintaining industrial competitiveness.
As OGRA prepares to examine the proposed revisions, attention will remain focused on the government's winter gas management strategy, LNG supply arrangements and broader efforts to contain the rapidly expanding circular debt.
The outcome of the regulatory proceedings will help determine how the financial pressures facing Pakistan's gas utilities are managed during the current fiscal year.
Source attribution: This report has been independently rewritten, reorganised and expanded for The Financial Daily, based on the supplied reporting concerning SNGPL and SSGC's petitions before OGRA, with background information attributed to The News International and Geo News. Proposed prescribed-price changes remain subject to regulatory determination and any applicable government notification.
