Government likely to hike gas prices in the next ECC meeting – Research Snipers

Government likely to hike gas prices in the next ECC meeting

Oil & Gas

The Prime Minister of Pakistan Imran Khan has signaled for gas price hike on Tuesday, now the government is likely to hike the gas prices in the upcoming meeting of ECC, the gas prices of two government-owned gas companies Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) would be discussed in the next meeting.

Once PM approves the gas price hike, the summary would be presented to the Economic Coordination Committee (ECC) of the cabinet, according to the official sources. While briefing on oil and gas sector the PM was informed that there is no way other than increasing gas prices for the two major companies in order to reduce circular debt and bridge the revenue gap of these two entities.

Minister for Petroleum Ghulam Sarwar Khan, senior government officers and additional secretary Incharge Petroleum Division attended the briefing.

The gas prices remained unchanged for the last 5 years, this resulted in piling up more debt on SNGPL and SSGCL because of the widening gap between the purchase price and sale price of gas. SNGPL is currently purchasing gas from producers at Rs629 per million British Thermal Unit (MMBTU) and selling it for Rs399 per unit incurring a net loss of Rs230 on every unit sold.

As previously reported, Oil and Gas Regulatory Authority (OGRA) recommended 30% average increase in gas prices but it could not be implemented due to transition in government.

The sources said that the government has two options, for now, one is to forward the summary of price increase to ECC after PMs approval or wait until OGRA’s next petition for the price increase by SSGCL and SNGPL.

During the first meeting of ECC, the Petroleum division recommended a 30 percent increase for all consumers and 86 percent for domestic consumers, however, ECC rejected the summary to increase Gas prices.

During the same meeting, ECC also asked authorities to chalk out the better plans for SNGPL and SSGCL other than price hikes in order to overcome their worsening financial position.

The Prime Minister in a statement has directed the authorities to curb gas theft in the country, the PM wants Petroleum division to come up with the plan which could effectively target gas theft in the country which causes Rs50 billion loss to the national exchequer annually.

The PM has also acknowledged the progress in Tapi and Iran-Pakistan gas pipeline with other significant energy projects. The PM has also urged departments to submit the detailed plans with delineated timelines as early as possible to address the various issues in the energy sector.