ISLAMABAD: Gas companies (the Sui Northern Gas Pipelines Limited and Sui Southern Gas Company) are seeking an increase of five percent over the last prescribed prices in their revised estimated revenue requirements (RERR) for fiscal year 2026.
The gas distribution companies asked for a slight uptick in the domestic cost of gas due to a higher estimated rate of rupee depreciation against the dollar. Increase in RLNG diversion estimate 81,303 BBTUs (two percent additional from fiscal year 2026 ERR decision).
The RLNG diversion is higher by 65 percent on a year-over-year basis on account of low off-takes by the power sector and shifting of captive power plants to the grid.
Ministries oppose gas price increase
Increase in T&D cost, mainly due to repair and maintenance for transmission lines affected by floods, and infrastructure budget for RLNG connections, and the Fiscal year 2024 prior year adjustment worth Rs 34 billion requested by SSGC.
As per the SNGPL, power sector off-takes had declined by 150-200 mmcfd from the committed demand of 550 mmcfd. Similarly, captive consumption had dropped from 190 mmcfd to 60 mmcfd. The SNGPL estimates that the gas suspension of 269 mmcfd for fiscal year 26, with the majority (389 mmcfd) to be curtailed during the second half of fiscal year 26.
The actual gas price increase is likely to be insignificant or nil since the Oil and Gas Regulatory Authority (OGRA) disallows several line items, including finance costs, UFG disallowances, PYA, and revenue shortfall in Balochistan, according to Optimus Capital Management.
The two gas companies have submitted separate RERR petitions for FY26 to the regulator. The petitions highlight a projected decline in average gas volumes (BBTU) from 495,545 to 471,976.
To address financial pressures, the companies are requesting key increases:
Cost of Gas: Requested to increase from Rs 1,533 to Rs 1,547 per MMBtu.
Exchange Rate Assumption: Sought to increase from Rs 280 to Rs 284 (per US Dollar).
This proposal came alongside a slight adjustment in commodity price projections, with anticipated oil prices falling from USD 75 to USD 73 per barrel (bbl).
The petitions proposed a significant increase in the Prescribed Price. The price without PYI is expected to rise from Rs 1,793 to Rs 1,886 per MMBtu.
The price, including PYI recovery, is requested to be set at Rs 1,958 per MMBtu.
The previously decided Estimated Revenue Requirement (ERR) for FY26 was Rs 1,793 per MMBtu.
Copyright Business Recorder, 2025
Comments
Comments are closed for this article.