SSGC Seeks Rs. 274.40 per MMBtu Hike to Avert Financial Crisis

Sui Southern Gas Company (SSGC) has warned that it will financially go under if gas rates aren’t increased. At a public hearing conducted by the Oil and Gas Regulatory Authority (OGRA), the gas distributor asked for a hike of Rs. 274.40 per MMBtu from July 1 onwards to collect an additional Rs. 359 billion. The managing director of SSGC said the company bought gas in US dollars and sold it in rupees which resulted in a staggering Rs. 300 billion in receivables. Payables also exceeded Rs. 300 billion and impacted SSGC’s hydrocarbon exploration activities. Meanwhile, SSGC’s CFO claimed that since the federal government’s notification of increased gas prices in November 2023, there has been a significant delay in implementing tariffs which has put the company in a financial rut. Industry stakeholders were divided on the proposed hike. Some advocated for market deregulation and competitive pricing to stimulate innovation and efficiency, while others argued against the increase. The All Pakistan Textile Mills Association (APTMA) Southern Region recommended competitive pricing for economic viability and market dynamics. They emphasized the need to address the distortions in natural gas pricing, which hinder efficiency and exacerbate circular debt issues. Furthermore, concerns were raised over the rise in gas tariffs since January 2023. Despite a decline in SSGC’s system intake, residential consumer demand continues to rise, which is a problem for the distributor. Also, SSGC’s struggle with high unaccounted-for-gas (UFG) rates underscores systemic challenges and governance issues.