Gas leakage ceiling: Gas distribution firms take OGRA to court
Govt may not be able to increase tariffs from July.
ISLAMABAD:
The government may not be able to notify new gas prices from July 1 as gas distribution companies have challenged in court the ceiling for unaccounted-for-gas – gas theft and leakage – set by the Oil and Gas Regulatory Authority (Ogra), saying the limit was lower than what they demanded.
A senior Ogra official said Sui Southern Gas Company (SSGC) had filed a petition in the Sindh High Court while Sui Northern Gas Pipelines Limited (SNGPL) had filed a case in the Lahore High Court, challenging Ogra’s decision of setting a less-than-expected unaccounted-for-gas benchmark.
In its decision, Ogra had also allowed SSGC and SNGPL to raise gas tariff by Rs7.54 per million British thermal unit (mmbtu) and Rs5.08 per mmbtu respectively applicable from July 1.
SSGC requested Ogra to fix UFG target at 7.44 per cent for the year 2011-12, but the regulator did not allow any increase in the benchmark and set it at 5 per cent.
Stakeholders, who attended public hearings conducted by Ogra, said SSGC’s request for increase in UFG benchmark must be declined as it would lead to a rise in gas tariffs. They were of the view that UFG was the result of negligence on the part of the company and this inefficiency must not be passed on to consumers, rather the burden should be borne by the company.
Citing an example, they said UFG level in neighbouring countries such as Bangladesh was less than five per cent and they were also charging 50 per cent lower tariff from consumers compared to Pakistan.
However, after reviewing the case of SSGC, Ogra observed that a revision of UFG benchmark would be considered after findings and recommendations of a study being conducted by an independent consultant. The study will consider all relevant factors highlighted by the company, including size and age of network, rise in value of gas, change in sales mix, law and order situation, negative impact of network extension and non-availability of anti-theft legislation.
On its part, SNGPL requested Ogra to fix its UFG level at 7.5 per cent, but Ogra fixed it at five per cent.
The Auditor General of Pakistan has already pointed out irregularity on the part of Ogra which allowed a seven per cent ceiling for gas theft and leakage in its decision on October 15, 2010. Ogra gave the ruling on a petition filed by SNGPL for the year 2009-10, which resulted in a loss of Rs2.87 billion in Gas Development Surcharge (GDS).
The Auditor General observed that the seven per cent UFG was not only the highest in the region, but also contrary to the world’s accepted benchmark of three to six per cent as well as five per cent allowed by Ogra the previous year.
Published in The Express Tribune, June 22nd, 2011.
The government may not be able to notify new gas prices from July 1 as gas distribution companies have challenged in court the ceiling for unaccounted-for-gas – gas theft and leakage – set by the Oil and Gas Regulatory Authority (Ogra), saying the limit was lower than what they demanded.
A senior Ogra official said Sui Southern Gas Company (SSGC) had filed a petition in the Sindh High Court while Sui Northern Gas Pipelines Limited (SNGPL) had filed a case in the Lahore High Court, challenging Ogra’s decision of setting a less-than-expected unaccounted-for-gas benchmark.
In its decision, Ogra had also allowed SSGC and SNGPL to raise gas tariff by Rs7.54 per million British thermal unit (mmbtu) and Rs5.08 per mmbtu respectively applicable from July 1.
SSGC requested Ogra to fix UFG target at 7.44 per cent for the year 2011-12, but the regulator did not allow any increase in the benchmark and set it at 5 per cent.
Stakeholders, who attended public hearings conducted by Ogra, said SSGC’s request for increase in UFG benchmark must be declined as it would lead to a rise in gas tariffs. They were of the view that UFG was the result of negligence on the part of the company and this inefficiency must not be passed on to consumers, rather the burden should be borne by the company.
Citing an example, they said UFG level in neighbouring countries such as Bangladesh was less than five per cent and they were also charging 50 per cent lower tariff from consumers compared to Pakistan.
However, after reviewing the case of SSGC, Ogra observed that a revision of UFG benchmark would be considered after findings and recommendations of a study being conducted by an independent consultant. The study will consider all relevant factors highlighted by the company, including size and age of network, rise in value of gas, change in sales mix, law and order situation, negative impact of network extension and non-availability of anti-theft legislation.
On its part, SNGPL requested Ogra to fix its UFG level at 7.5 per cent, but Ogra fixed it at five per cent.
The Auditor General of Pakistan has already pointed out irregularity on the part of Ogra which allowed a seven per cent ceiling for gas theft and leakage in its decision on October 15, 2010. Ogra gave the ruling on a petition filed by SNGPL for the year 2009-10, which resulted in a loss of Rs2.87 billion in Gas Development Surcharge (GDS).
The Auditor General observed that the seven per cent UFG was not only the highest in the region, but also contrary to the world’s accepted benchmark of three to six per cent as well as five per cent allowed by Ogra the previous year.
Published in The Express Tribune, June 22nd, 2011.