Ogra Schedules Hearings as Consultant Proposes Cut in Gas Loss Allowance Amid Tariff Hike Requests

The Oil and Gas Regulatory Authority (Ogra) has scheduled public hearings in Lahore and Karachi on May 12 and 13 to review tariff increase petitions filed by Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited.

The hearings come as both utilities seek significant tariff hikes—around 21% and 121%, respectively—to meet revenue requirements for the fiscal year 2026–27. The regulator had earlier postponed hearings due to volatility in global energy markets, particularly LNG prices, amid Middle East tensions.

An independent consultant, KPMG Taseer Hadi & Co, has proposed a gradual reduction in the allowance for unaccounted-for gas (UFG) losses over the next five years. The recommendation suggests lowering UFG allowances to 6.5% in FY27, gradually declining to 5.5% by FY31.

Under the proposal, SNGPL would receive an additional 0.5% allowance due to operational challenges, while SSGCL would get 1.7%. This would bring SNGPL’s UFG allowance to around 7% in FY27 and near 6% by FY31, while SSGCL’s allowance would range from approximately 8.2% to 7.3% over the same period.

Currently, the system loss allowance stands at about 7.6%, including a 2.6% performance-based component. Actual losses remain higher, with SNGPL at 8.8% and SSGCL at 13.6%.

The consultant also referenced a 2016 decision by the Economic Coordination Committee (ECC), which mandates that transmission losses be capped at 0.5% and calculated based on actuals, while distribution losses should also reflect real performance. However, no specific benchmark exists for UFG in RLNG transmission and distribution, leading to pricing inefficiencies.

As a result, RLNG prices have reportedly increased by around Rs1,500 per mmBtu, nearly matching domestic gas prices.

Meanwhile, SNGPL has requested an increase in its prescribed gas price from Rs1,853 to Rs2,084 per mmBtu for the next fiscal year, factoring in LNG diversion costs.

Ogra is required by law to issue its tariff determination at least 40 days before June 30, enabling the government to notify revised gas prices from July 1. Pakistan has also committed to the International Monetary Fund (IMF) to ensure timely adjustments in energy tariffs to curb the growing circular debt, which has exceeded Rs3 trillion.

The upcoming hearings are expected to play a critical role in shaping gas pricing policy and addressing inefficiencies in the energy sector.