OGRA might allow for further increase in gas price, but by a lower margin

November 11, 2019 (MLN): Sui Southern Gas Company (SSGC) and Sui Northern gas Company (SNGP) have requested Oil and Gas Regulatory Authority (OGRA) to allow for an 8-31% increase in gas prices, says a research note by Sherman Securities.

The request was made after both the companies claimed to have shortfall in their respective revenues, which they plan to cover after attaining the above stated hike in gas prices.

According to the report, it is highly likely the OGRA may permit these companies to increase gas prices, but by a lower margin, i.e. Rs. 25 / mmbtu for SSGC and Rs. 50 / mmbtu for SNGP. This is because OGRA has already allowed for substantial increase in gas prices in the past few months.

Another factor that might possibly be hindering OGRA from letting the two gas giants to increase prices by a higher margin is the GIDC issue, which is still awaiting final judgment from the Supreme Court.

While the fertilizer sector may benefit significantly from the price hike, the Chemical and Cement sectors might suffer the brunt of it as they do not possess the power to pass on the impact of higher input cost onto the consumers.

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