50% hike expected in gas prices soon

The Ministry of Energy has made a significant decision with far-reaching implications for the public. Starting next week, gas prices are expected to surge by over 50 per cent. This move, in accordance with an agreement with the IMF, will take effect on July 1.

Under this adjustment, the tariff for Sui Northern Gas Pipelines Limited (SNGPL) will experience a substantial increase of Rs415 per MMBTU, while the tariff for Sui Southern Gas Company Limited (SSGC) will see a parallel rise of Rs417 per MMBTU. The Oil & Gas Regulatory Authority (OGRA) has granted its approval for this price hike, with the final decision resting with the federal government.

According to the terms of the IMF agreement, this increase in gas prices is slated for implementation on July 1. Officials from the Ministry of Energy have disclosed that the gas sector is grappling with annual losses of approximately Rs350 billion, further exacerbating the mounting circular debt, which has now surged to Rs2,700 billion.

According to Samaa News, these financial woes have taken a toll on the energy landscape, resulting in the departure of several exploration firms from the country over the past 13 years. Pakistan’s reliance on RLNG imports to meet industry demands, especially during the winter season, has become increasingly pronounced.

In response to this predicament, officials have announced plans to narrow the gap between import tariffs for LNG and natural gas. During a press conference on Friday, Energy Minister Muhammad Ali, joined by caretaker ministers Shamshad Akhtar and Gohar Ijaz, highlighted that the gas sector has been bleeding Rs300 billion annually, underscoring the urgent need to explore new avenues for oil and gas production.