Gas utilities seek tariff hike of up to Rs22 per unit

Price hike will be used to finance new schemes in violation of rules.


Zafar Bhutta July 11, 2011

ISLAMABAD:


In spite of the fact that the country faces a prolonged gas crisis and 10 to 100 per cent tariff increases are on the cards, gas companies have sought a separate increase of up to Rs22.48 per million British thermal unit (mmbtu) to generate Rs14.6 billion in revenues to finance new gas schemes, which are contrary to the laws.


Sources told The Express Tribune that the move by Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) for increase in gas tariff to finance parliamentarians’ schemes was in violation of rules and that too at a time when they had failed to provide gas to existing consumers. Rules say that gas utilities cannot launch new schemes if they have failed to provide gas to existing consumers.

“In the face of acute shortages, an expansion of the transmission and distribution network will reduce gas supply to all consumers, which will ultimately lead to economic distortion,” a source said.

For the first time in history, the country is experiencing gas outages in the summer season, when normally the demand comes down.

In its decisions related to revenue requirements of the two gas distributors, the Oil and Gas Regulatory Authority (Ogra) had linked initiating work on new schemes with fresh discoveries of gas.

The petroleum ministry has also written a letter to Ogra to allow work on those schemes which are being started under the prime minister’s directive. In the last meeting of the National Assembly Standing Committee on Petroleum and Natural Resources, parliamentarians from different political parties criticised Ogra for stopping work on their schemes.

At present, 90 per cent gas schemes are in the pipeline under the directives of prime minister. “If Ogra allows gas utilities to resume work on new schemes, it will be in violation of rules pertaining to licencees (SNGPL and SSGCL) and inflation-hit consumers will have to face an additional burden,” a source said.

Gas utilities have already high Unaccounted-for-Gas (UFG) levels – gas theft and leakages – and any extension in pipelines will lead to increase in UFG, which will adversely affect their profitability.

According to sources, SSGC in its review petition has sought a gas tariff increase of Rs2.35 per mmbtu to generate Rs930 million while SNGPL has demanded a tariff hike of Rs22.48 per mmbtu to generate Rs13.65 billion.

Sources said the gas utilities had pleaded that they would have to stop work on the schemes which were in the pipeline in case no tariff increase was approved. “We have invested in some schemes and the purchased material is facing the threat of damage, so we should be allowed increase in gas tariffs to complete the schemes,” a source quoted the two companies as saying.

Published in The Express Tribune, July 12th, 2011.

COMMENTS (1)

Curious | 12 years ago | Reply

These LPG gas cylinders looks like Indian ones, I was under impression that they are Pakistani LPG cylinders are blue and not fully circular on top. please clarify for the sake of my curiosity.

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