The government will raise gas prices from July 1, 2015, a senior Petroleum Ministry official revealed to Business Recorder. He said that there had been no increase since January 2013 and now the relevant officials have started preparing a working paper to increase gas prices from July 1, 2015. Sources said that during past one year the government has provided 400,000 gas connections to consumers and to meet the development and expansion of network of gas utilities an upward revision in gas prices is on the cards.
According to sources, the Ministry of Petroleum in consultation with other relevant departments has started preparing a working paper to increase gas tariff. Oil and Gas Regulatory Authority (OGRA) had recommended in July 2014 to raise gas price by up to 20 percent; however the government did not agree to it for political reasons.
Last year, the Authority proposed a tariff increase of 13.55 percent for all the categories of gas consumers in its decision on petitions filed by SNGPL and SSGC. Under the Ogra ordinance, the government is bound to give an advice on new prices in 40 days; and if it fails, Ogra's decisions are implemented; but during this period neither federal government gave advice to OGRA nor did the Authority implement its determination. The consequence: both gas utilities to date suffered an estimated financial loss of Rs 50 billion.
According to a senior OGRA official, the Authority is not required to seek government advice to implement its pricing decisions; however, Ogra seeks government's input due to a cross-subsidy mechanism in place. Ogra determines gas tariff for the two gas utilities twice a year - on July first and on January first. Ogra's last recommendation was on July 3, 2014 and, according to sources, it is scheduled to make a recommendation on increasing gas prices during the first week of June.