Sui Southern Gas Profit Drops Sharply — Could Gas Prices Go Up?
The sharp decline in Sui Southern Gas Company Limited’s (SSGC) profitability has triggered fresh concerns among consumers about a potential increase in gas rates in the coming months. Financial results for 3MFY26 reveal a steep earnings contraction, highlighting deeper structural and operational challenges within Pakistan’s gas sector.
According to the latest financial disclosure, Sui Southern Gas Company Limited (PSX: SSGC) posted a profit after tax of Rs785.1 million for the quarter ended September 30, 2025, marking an 84.9% year-on-year decline compared to Rs5.19 billion in the same period last year.
Key Reasons Behind Sui Southern Gas Profit Decline
Several factors are believed to have contributed to the significant drop in SSGC’s earnings:
1. Rising Operating and Gas Procurement Costs
Higher costs related to imported LNG, system maintenance, and network losses have put pressure on margins. With global energy prices remaining volatile, gas procurement has become increasingly expensive for utility companies.
2. Unrecovered Revenue and Circular Debt
SSGC continues to face delayed payments and receivables, especially from power sector entities. These cash flow constraints limit the company’s ability to manage operational expenses efficiently.
3. Regulated Tariffs and Fixed Returns
As a regulated utility, SSGC operates under government-approved tariffs, which may not fully reflect rising costs. When revenue adjustments lag behind expenses, profitability naturally suffers.
Could This Lead to Higher Gas Rates?
The sharp fall in profits strengthens the case for upward gas tariff revisions. Historically, when gas utilities report sustained losses or declining earnings, regulators often consider price adjustments to ensure:
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Financial sustainability of gas companies
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Continued investment in infrastructure
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Stable gas supply for domestic and industrial users
Industry analysts suggest that unless cost recovery improves, gas consumers may eventually bear part of the burden through revised tariffs.
Impact on Consumers and the Economy
An increase in gas prices could have wider economic implications, including:
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Higher household utility bills
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Increased production costs for industries
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Inflationary pressure on essential goods
This makes SSGC’s declining profitability not just a corporate issue, but a broader economic concern for both policymakers and consumers.
What to Expect Going Forward
While no immediate gas price hike has been officially announced, the steep profit drop in 3MFY26 places Sui Southern Gas under pressure to seek regulatory relief or tariff rationalization. Market observers will closely watch upcoming decisions by energy regulators, as they could directly affect gas prices nationwide.
For now, consumers should stay informed, as SSGC’s financial performance may play a key role in shaping future gas rates in Pakistan.
