Gas prices in Pakistan likely to be increased: Report

Gas prices in Pakistan likely to be increased: Report

ISLAMABAD - Federal government may increase the price of Gas upon the recommendations of the Sui Southern Gas Company (SSGC).

SSGC has filed a petition to raise the gas tariff by Rs109.03 per million British Thermal Units (mmbtu) with effect from July 1, 2018.

SSGC through a public notice on Tuesday said the revenue would enable it to meet the cost of gas, operating and return on assets. “The cost of gas is linked to the international price of crude oil/fuel oil in accordance with the agreements between the federal government and the gas producers,” the notice said.

The SSGC document revealed that the cost of gas has been Rs460.33/mmbtu and after adding the operating cost, depreciation, return on assets, subsidy for LPG Air-Mix projects, UFG adjustment, other operating income, the average prescribed price turned out to be Rs531.23 / mmbtu.

Currently, SSGC charges the average prescribed price of Rs422.20 /mmbtu, and has proposed an increase of Rs 109.03/mmbtu.

Head of research Zeeshan Afzal at Insight Securities said it was a routine matter of gas companies to file recommendation for tariff increases to earn the fixed return on operating assets after incorporating operating costs and allowed UFG losses.

However, he added, “The government since last few years has avoided increasing consumer prices to benefit the consumers by making adjustments in gas subsidies.”