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ISLAMABAD: Pakistan’s energy regulator is weighing significant gas tariff increases for fiscal year 2026-27, as an independent consultant has recommended a gradual reduction in unaccounted-for-gas (UFG) losses over the next five years.
The Oil and Gas Regulatory Authority (Ogra) has scheduled public hearings on May 12 in Lahore and May 13 in Karachi to review tariff petitions submitted by Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL). The two utilities have sought tariff increases of around 21% and 121%, respectively, to meet their projected revenue requirements.
The hearings were earlier postponed from April due to volatility in global energy markets, particularly liquefied natural gas (LNG) prices, amid tensions in the Middle East. However, regulatory timelines require Ogra to issue its determination at least 40 days before June 30, enabling the government to notify revised consumer tariffs from July 1.
Pakistan has also committed to the International Monetary Fund (IMF) to ensure timely biannual gas tariff adjustments to prevent further accumulation of circular debt, which has already crossed Rs3 trillion.
According to disclosures made on Monday, consultant KPMG Taseer Hadi & Co has proposed reducing UFG allowances in tariffs to 6.5% in FY27, gradually declining to 5.5% by FY31. Additional allowances of 0.5% for SNGPL and 1.7% for SSGCL have been suggested to account for operational challenges.
If implemented, SNGPL’s total UFG allowance would stand at around 7% in FY27 and fall to nearly 6% by FY31. For SSGCL, the allowance would be higher, estimated at 8.2% in FY27 and declining to 7.3% by FY31. Currently, the prescribed system loss allowance is about 7.6%, while actual losses remain elevated at 8.8% for SNGPL and 13.6% for SSGCL.
The consultant also highlighted gaps in existing benchmarks, noting that transmission losses are capped at 0.5% under a 2016 Economic Coordination Committee decision, while distribution losses are charged at actual levels. However, no specific benchmark exists for RLNG-related losses, leading to pricing distortions.
This has effectively raised the cost of re-gasified LNG (RLNG) by around Rs1,500 per million British thermal unit (mmBtu), bringing it close to domestic gas prices.
SNGPL has proposed increasing its prescribed gas price from Rs1,853 per mmBtu to Rs2,084 for the next fiscal year, factoring in LNG diversion costs.
The outcome of Ogra’s hearings will be critical in determining future gas prices, as authorities attempt to balance consumer affordability with financial sustainability of the energy sector and commitments under ongoing economic reforms.
