Gas has become more expensive for Pakistan’s two main distribution companies, after the Oil and Gas Regulatory Authority raised the price of regasified liquefied natural gas for October by as much as 15.3 per cent. The revision applies to gas supplied through Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited, the utilities that carry gas to homes, businesses and industry across much of the country. For households watching their energy bills, it is another reminder of how closely domestic prices follow the international market.
The increase comes after a fall in the previous month. In September, regasified liquefied natural gas prices had dropped by 20 per cent, giving consumers a brief respite. October has reversed part of that relief. The regulator has linked the new increase mainly to higher international crude oil prices, which feed into the pricing of imported gas cargoes. Pakistan, as a net importer, feels such movements quickly, because much of its gas is bought abroad, shipped in as liquid, and turned back into gas at import terminals before entering the pipeline network.
The timing matters for another reason. October’s prices will shape fuel costs for power generation in December, when electricity produced from regasified gas enters the system at the new rates. In September, electricity from this gas cost Rs40 per unit, when the average imported liquefied natural gas price stood at 10.06 dollars per million British thermal units. That import price has now risen to 10.75 dollars for October, and the higher fuel cost will work its way through to the power sector. Gas and electricity prices cannot be read in isolation: a change in one soon shows up in the other, and in the bills consumers pay.
The import price has moved within a wide range in recent months. The average delivered ex-ship price from two cargoes rose to 10.75 dollars per million British thermal units in October, up from 10.06 dollars in September. In August it had been 12.12 dollars, and in July as high as 18.96 dollars. October’s increase, while significant, still leaves import prices well below the summer peak.
SNGPL and SSGCL Face Higher RLNG Rates
The notification sets out separate prices for the two companies, and for the transmission and distribution stages. For Sui Northern, the sale price at transmission has risen by 13.9 per cent, to 15.94 dollars per million British thermal units in October, from 13.99 dollars in September. At distribution, where gas is delivered onwards to end users, the price has risen by 14 per cent, to 17.33 dollars, from 15.196 dollars the month before.
Sui Southern faces a similar pattern, with slightly larger percentage rises. Its transmission price has climbed by 15.25 per cent, to 14.53 dollars per million British thermal units, against 12.611 dollars in September. At distribution, its price has risen by 15.27 per cent, to 16.396 dollars, from 14.22 dollars the previous month. These are the prices at which the companies sell regasified gas onward, and they form the basis for the charges that eventually reach consumers, once other regulated costs are added.
The two companies serve different parts of the country, which is why their prices and losses differ. Sui Southern supplies Sindh and Balochistan, while Sui Northern serves Punjab and Khyber Pakhtunkhwa. Households in different provinces can therefore face different supply conditions, even when the imported fuel is the same, and each network’s performance bears directly on what its consumers ultimately pay.
Distribution Costs Push RLNG Prices Higher
One striking feature of the notification is the gap between what Pakistan pays to import gas and what consumers are charged after it passes through the system. The average delivered import price stood at 10.75 dollars per million British thermal units in October. By distribution, however, the price had reached 16.396 dollars for Sui Southern and 17.33 dollars for Sui Northern, higher by 5.65 dollars and 6.58 dollars respectively. That difference is the many costs layered onto the fuel as it moves from ship to stove.
Part of the difference comes from charges by public-sector bodies involved in importing and supplying gas. Pakistan State Oil, Pakistan LNG Limited and port authorities charge margins linked to retainage and other services, amounting to 3.77 per cent of the delivered ex-ship price. On top of those charges sit distribution losses: gas that enters the network but is not billed. Sui Northern’s losses were reported at nearly 9 per cent, against 7.47 per cent in October last year, while Sui Southern’s stand at 12.55 per cent, against about 10.6 per cent last year.
Rising losses matter because paying consumers effectively carry the cost of gas that never reaches a meter. When losses rise, the unit price for everyone else must rise too, if companies are to recover their costs. That is why debates about gas pricing so often turn to network performance and ageing pipelines, not import prices alone. Even a fall in global prices can be muted if losses and system charges climb at the same time. For consumers, the question now is how October’s revision will show up ahead, in December power costs and in the bills of users who rely on gas directly.
