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Arachi: SUI Northern Gas Pipelines Limited (SNGP) has estimated 354 MMCFD suspension of natural gas purchases from local research and production (E&P) companies, which reuses Gesphoid Liquid Natural Gases and RLG -Natural Gases (RLNG).
Expected gas suspension for the current financial year, as was previously reviewed by the SNGP, stood at 86 MMCFD. Domestic E&P companies will also affect the production of crude oil in view of any natural gas suspension -related gas sectors. The significant reduction in oil and gas production will have a negative impact on the overall growth of GDP, especially when mining and excavation (including oil, gas and coal) weighs 9.0 % in the industrial sector. In addition, E&P companies will have a negative impact on the profits, according to a research note from Topline Securities.
To remove the expected revenue of Rs 2025 billion, SNGP has proposed a 40-42 percent increase in gas prices from July 2025. This reduction is mainly due to the loss of revenue revenue due to the turning of gas supply from captive power units to domestic consumers, in response to additional RLNG in the system. The data also includes late payment surcharge (LPS), which has Rs 96 billion.
For fiscal year 26, SNGP expects RLNG to bend with domestic consumers will reach 242 MMCFD, compared to the Oil and Gas Regulatory Authority (OGRA), in a review of the revenue -approved revenue (RERR) for the fiscal year 25 compared to 164 MMCFD. It is expected that an additional 78 MMCFD of RLNG is expected to increase by Rs 70 billion, as the average tariff of 1,000/mmbtu for residential consumers is significantly lower than the rate of 3,500/mmbTU.
According to its usual practice, the company has added Rs 96 billion in its fiscal year 26 estimates due to LPS. However, OGRA usually rejects this component, and analysts expect the regulator to do this again. Except for the LPS, the price hike will decrease by 40-42 % to 19-20 %. Nevertheless, it is expected that the OGRA will not approve the full increase and will review it down.
Due to the recent decline in debt costs, the average cost of SNGP’s expected weight on operating fixed assets (WACC) is now 23.39 %. For fiscal year 26, the company has proposed an average of Rs 12 billion fixed assets compared to Rs 109 billion approved by OGRA in the fiscal year 25, indicating a net increase of Rs 15 billion.
According to Topline Securities, the government’s long -term purpose under the IMF program is to increase the dependence on the national grid, discouraging the use of captive force. Although the government initially pledged to disconnect gas supply to captive units by the end of January 2025, it later adopted an alternative approach: increased revenue to push consumers towards the grid. In mid -March 2025, a grid levy of RS791/MMBTU was implemented above the current RS3,500/MMBTU rate.
However, several companies have received orders from the higher courts to set up against the grid levy. Industry sources suggest that the GAS gas prices and revenue for prisoners will continue to increase until the cost of generating prisoners is associated with national grid prices.
Looking forward, the government plans to either talk to Qatar to either reduce the number of RLNG cargo or to review prices below. The 15 -year supply agreement signed in February 2016 includes a price review clause after 10 years. If both sides fail to get consensus on prices, the deal will automatically be shortened for 11 years.
