OGRA seeks a massive 214% hike in gas prices

Proposal said to be in line with the IMF recommendations

KARACHI: The Oil and Gas Regulatory Authority (Ogra) has sent a summary to the federal government seeking a massive increase of 213.7 per cent in gas prices for domestic consumers, which if approved, would come into effect from January 2020.

According to the summary, Ogra seeks the highest price increase of 213.7 per cent for domestic consumers falling in the first slab of the Sui Southern Gas Company (SSGC) and 192 per cent for Sui Northern Gas Pipeline Limited (SNGPL).

The SSGC supplies gas to Sindh and Balochistan, while SNGPL to Punjab and Khyber-Pakhtunkhwa.

If Ogra’s recommendation manages to obtain the federal government’s nod, the gas companies would be able to collect billions of rupees in revenue from consumers. It is expected that the SSGC would collect around Rs275 billion and SNGPL Rs244 billion.

The increase in the prices of gas has been suggested “under the auspices of the IMF”, according to a statement issued by Taurus Securities regarding the Ogra summary.

“If notified, the said hike is likely to impact the entire economy, including households and industries, severely,” stated the brokerage firm. “Resultantly, we may even witness hike in the headline inflation.”

The research house has forecast the Consumer Price Index (CPI) at 11% for FY20.

The regulator has suggested increase in gas prices for domestic consumers by 191%, fertiliser sector 135%, and consumers falling under the category of roti tandoor, commercial, industrial, zero-rated export industry, captive power plants, compressed natural gas (CNG), cement and power plants by 31%.

Ogra suggests increasing tariff for first slab of the SSGC domestic consumers from Rs121 per million British thermal units (mmbtu) to Rs379.62 per mmbtu; second slab tariff from Rs300 to Rs379.62 per mmbtu; third slab Rs553 to Rs Rs569.43 per mmbtu and fourth slab to Rs759.24 from Rs738 per mmbtu. However, it advises reducing the fifth slab tariff to Rs1,091.87 from Rs1,107 per mmbtu and sixth slab’s to Rs1,440.05 from Rs1,460 per mmbtu.

For the SNGPL’s domestic consumer, Ogra proposes increasing the first slab tariff from Rs121 per mmbtu to Rs353.26 per mmbtu; second slab tariff from Rs300 per mmbtu to Rs353 per mmbtu; third slab from Rs553 per mmbtu to RsRs530 per mmbtu. However, the regulator recommends reducing the fourth slab tariff to Rs706 from Rs738 mmbtu, while increasing the fifth slab tariff to Rs1,273 from Rs1,107 per mmbtu and sixth slab to Rs1,679 from Rs1,460 per mmbtu.

Ogra has proposed increasing the tariff for roti tandoors from Rs780 per mmbtu to Rs1,026, while that for commercial consumers from Rs1,283 per mmbtu to Rs1,687. It also recommended hike in the tariff for general industry from Rs1,021 per mmbtu to Rs1,343.