Rising gas tariff

It will be interesting to see how the government deals with such a request for the second time in a single fiscal year

Editorial March 26, 2019

The two state-owned gas utilities have once again asked the government to increase gas prices as they attempt to bridge their revenue shortfalls owing to higher cost of operations and the linking of the locally-produced gas to international petroleum prices.

The cost of gas provided by the Sui Northern Gas Pipelines Limited (SNGPL) has increased by Rs66 per unit to reach Rs566.97 per unit, or an increase of around 14 per cent, when compared with its existing average prescribed price of Rs501 per unit. The utility has sought an increase of Rs722.51 per MMBTU in its normal business of natural gas from the new fiscal year, raising its average prescribed price per unit from Rs501.19 to Rs1,224. It has further demanded about Rs111.32 per MMBTU under the head of diversion of Regasified Liquefied Natural Gas (RLNG) to domestic consumers and Rs6,086 per MMBTU for the Liquefied Petroleum Gas (LPG) business.

The Sui Southern Gas Pipelines Company Limited (SSGCL) has sought a Rs106.54 increase in its average prescribed price of Rs591.67 per unit to reach Rs698.21. The SSGCL’s cost of gas has estimated an increase of about Rs50 per unit to Rs642 per unit from its existing prescribed price.

The last time the government had found itself at such a pass, the increase was termed a necessity. But a few months later, when that increase reflected in the form of inflated bills that triggered clamour from all quarters, it brought the government crashing down to reality. It was followed by a series of swift chops and changes at the top of both organisations.

But the requests filed by the two gas companies this month show that the government has just been grabbing at air. Even if Prime Minister Imran Khan’s prognosis is to be believed, his preferred treatment of the malaise does not seem to have had the desired effect. Having already ‘dealt’ with the consequences of such a hike once, it would be interesting to see how the government deals with such a request for the second time in a single fiscal year.

Published in The Express Tribune, March 26th, 2019.

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