Stern action: OGRA slashes SSGC, raises SNGPL gas prices

Regulator also imposes ban on new gas development schemes, reduces UFG ceiling to 4.5%.

ISLAMABAD:

The Oil and Gas Regulatory Authority (Ogra) has proposed a slash in the price of gas for the consumers of Sui Southern Gas Company (SSGC) and a hike in prices for the consumers of Sui Northern Gas Pipeline Limited (SNGPL), effective from July 1.

According to a senior Ogra official, the regulator forwarded its decision regarding the gas prices to the federal government on Saturday and asked it to notify the prices from the start of the new fiscal year. Under the Ogra ordinance, the federal government must forward any advice regarding the new prices to the regulator within 40 days. In case it does not do so within the stipulated time, Ogra is authorised to implement the decision.



In a major related development, the regulator has also imposed a ban on the launch of new gas development schemes. The official revealed the decision was taken in light of the current gas crisis and to keep gas utility companies from passing the burden of new schemes onto consumers.

According to him, SNGPL and SSGC had originally requested Ogra to raise gas prices for consumers by Rs53 per mmbtu and Rs32 per mmbtu respectively in order to recover Rs14 billion in revenue lost on account of gas theft and to cover the Rs10 billion needed to launch different LPG projects.



The regulator, however, rejected the gas companies’ requests. After conducting public hearings and taking into account the concerns of consumers, it allowed SNGPL to raise gas prices by just Rs8.72 per mmbtu and slashed SSGC’s current gas prices by Rs12.12 per mmbtu, the official told The Express Tribune.

Several controversial LPG air mix projects were initiated by the previous government and placed undue burden upon natural gas consumers. Even a single 50 mmcfd LPG air mix project was estimated to raise the cost of gas for all but domestic consumers by 10%.

Meanwhile, Ogra has also taken stern action against gas companies by reducing the ceiling of unaccounted for gas (UFG) to 4.5%. Under the previous Ogra chairman, gas companies were allowed a 7% UFG ceiling.

Published in The Express Tribune, June 2^nd, 2013.