K-P dismisses regulator’s gas tariff proposal

Published: December 5, 2017
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Representational image PHOTO: REUTERS

Representational image PHOTO: REUTERS

ISLAMABAD: The Khyber-Pakhtunkhwa (K-P) government has rejected outright a gas tariff revision proposal given by the Oil and Gas Regulatory Authority (Ogra), terming it irrational.

At a public hearing held by Ogra for revision in the Natural Gas Third Party Access Rules 2012, K-P Oil and Gas Company Chief Executive Officer Raziuddin Razi, speaking on behalf of the provincial government, suggested that input should be taken from all stakeholders, especially the provincial government, before taking any decision.

As part of gas sector reforms, Ogra has proposed a new formula featuring a varying rate of return for the public gas utilities – Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company – instead of the current fixed return.

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Reports suggest that the government has given assurances to SNGPL that the new rate of return, to be set by Ogra, could not be less than the return allowed to Sui gas transmission and distribution companies under their licences.

As a result, whether the rate of return is variable or fixed, it will not have any negative consequences for the shareholders and employees of the two companies.

Razi pointed out that provinces had no representation in the current structure of the oil and gas industry regulator and as a result “flawed” decisions were taken.

Moreover, he said, without consultation with the provinces, the proposed tariff regime would not benefit anyone and lead to inefficient gas consumption. Razi suggested that provinces should have proper say in the draft of Third Party Access Rules 2017 and the tariff regime. “Provinces need to be involved to prepare a useful summary for consideration of the Council of Common Interests,” he said.

Gas firms allowed to recover more losses from consumers

Similarly, the third-party access rules and gas transportation charges should be decided with the provinces before taking them to the CCI in order to save time and effort.

Published in The Express Tribune, December 5th, 2017.

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