As the government has failed to give any advice on gas prices within the stipulated time, the Oil and Gas Regulatory Authority (Ogra) has decided to announce a 13.55 per cent increase in the tariff for all gas consumers on Monday.
Earlier, the Ministry of Petroleum and Natural Resources had moved a summary to the Economic Coordination Committee (ECC) in a meeting held in the first week of July, seeking approval for increase in gas prices from 10 to 100 per cent. ECC approved an increase of 13.55 per cent for all categories of consumers as determined by Ogra, but directed the ministry to get the go-ahead from the prime minister or cabinet for a further increase.
Ogra has determined a tariff increase of 13.55 per cent for all types of gas consumers in its decision on petitions filed by Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC). Under Ogra ordinance, the government is bound to give advice on new prices in 40 days and if it fails, Ogra’s decisions are implemented.
A senior Ogra official said the authority was not required to seek advice of the government to implement decisions relating to gas prices of utilities. However, Ogra seeks consent of the government due to the cross-subsidy mechanism.
In its revised summary moved to ECC, the petroleum ministry proposed increase in gas tariff in the range of 13.55 to 96.06 per cent. However, ECC is yet to take a decision.
Under the revised proposal, gas price for compressed natural gas (CNG) stations may rise by 16.73 per cent against earlier recommendation for 69.06 per cent. The price was revised downwards in an attempt to pacify some ministers, who had strongly opposed the proposed mammoth increase, arguing it would lead to collapse of the CNG industry.
All Pakistan CNG Association (APCNGA) had also threatened a countrywide protest drive, but after the petroleum ministry’s intervention they withdrew their protest call. If ECC approves, CNG price will become equal to 55 per cent of petrol price against earlier proposal for 65 per cent.
Besides CNG stations, the ministry proposed a 96.06 per cent increase in price of gas being used as feedstock by old fertiliser plants to gradually reduce cross-subsidy being paid by textile and other industries. However, no increase in gas price was recommended for new fertiliser plants.
For other sectors including domestic, commercial, industrial and power plants, a tariff increase of 13.55 per cent had been recommended.
Published in The Express Tribune, August 7th, 2011.