OGRA allows upward revision of gas prices

OGRA warns against selling gas at higher-than-notified prices

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has allowed gas utilities, the Sui Northern Gas Company Limited (SNGPL) and the Sui Southern Gas Company Limited (SSGCL), to increase the gas prices to meet their revenue shortfall for year 2018-19.

The SNGPL has been allowed to increase the prescribed gas price by Rs119.68 per mmbtu to meet its revenue shortfall of Rs50 billion. The regulator allows the SSGCL to hike the price by Rs69.10 per mmbtu to meet its revenue requirement of Rs24.93 billion.

After the increase, the average price of the SNGPL will be Rs631.80 per mmbtu and that of the SSGC will soar to Rs632.86. Both the utilities will collect around Rs75 billion from gas consumers to meet their revenue requirements for financial year 2018-19.

The two gas utilities had filed review petitions before the regulator, seeking increase in the gas prices. Ogra has sent its determination to the federal government to notify the new gas prices for the consumers.

The Pakistan Tehreek-e-Insaf (PTI) government has already increased the natural gas prices by up to 143% to recover Rs94 billion from the consumers. The objective of the increase was to reduce the combined revenue shortfall of the gas utilities from Rs152 billion to Rs58 billion.



The regulators has provisionally determined the revenue requirement of the SNGPL at Rs280,347 million, while the sales revenue has been worked out at Rs229,557 million – a shortfall of Rs50,790 million.

In its decision, Ogra says that the increase in the average prescribed prices has been worked out to be Rs119 per mmbtu effective July 1, 2018. The UFG stood at 11.07% and it has been allowed that 6.3% is recovered from the gas consumers.

According to Ogra, the revenue shortfall has primarily emerged because of inadequate revision in gas prices in respect of DERR 2018-19, adding that the backlog on account of insufficient revision in gas sale prices is persistently pilling up.

Ogra says that if the gas prices are not increased for 2018-19, the total revenue shortfall as of June 30, 2019 will soar to approximately Rs164 billion. The recovery of this shortfall in the remaining months of 2018-19 may require manifold increase in the gas prices by the government, it says.

In case of the SSGC, the regulator provisionally determined the revenue requirement at Rs231,880 million while the sales revenue is worked out at Rs206,947 million. The regulator has noted a shortfall of Rs24,933 million in revenue requirements for current financial year.



The increase in average prescribed prices has been works out at Rs69.10 per mmbtu from July 2018. “The revenue shortfall was due to inadequate revision in gas prices in respect of DERR financial year 2018-19 and due to increase in cost of gas owing to rupee-dollar parity,” the regulator noted.

The UFG stood on a higher side at 14.05% and Ogra allows 6.3% recovery from the consumers. The gas utility has been directed that gas pressure for the domestic consumers should not exceed 8 inches of water column.

The management of the SSGC has also been directed for making reverse adjustments of money charged from the consumers on this account in the gas bills of those consumers to whom pressure factor had been applied in violation of the standard contract.