OGRA approves 2% tariff hike for SNGPL consumers

New gas price will apply to consumers in Punjab and K-P

ISLAMABAD:

The Oil and Gas Regulatory Authority (Ogra) has allowed Sui Northern Gas Pipelines Limited (SNGPL) to increase the average price of gas by 2% for all categories of consumers for financial year 2020-21. The tariff hike will be applicable to consumers in Punjab and Khyber-Pakhtunkhwa.

The regulator announced the increase in tariff on Wednesday.

However, the federal government will make the final decision on the increase in tariff for different categories of consumers. Gas prices for domestic consumers have been lower compared to other consumers who bear cross-subsidy. The regulator has allowed an increase of Rs13.42 per million British thermal units (mmbtu).

The existing average sale price is Rs631.41 per mmbtu, which will be increased to Rs644.84.

Earlier, the regulatory authority had allowed an increase of 5.6% in gas prices for the consumers of Sui Southern Gas Company (SSGC), which caters to Sindh and Balochistan provinces.

Ogra has determined the estimated revenue requirement of SNGPL for financial year 2020-21 and has sent it to the federal government for its advice on the sale price. Any revision as advised by the federal government shall be accordingly notified by Ogra. Till such time, the existing category-wise natural gas sale prices will prevail.

The regulator has set SNGPL’s revenue requirement at Rs209.113 billion for financial year 2020-21, which will be recovered through the 2% price hike. The gas utility had sought an increase of 123%. It had also called for adjusting the previous shortfall amounting to Rs197 billion.

However, the regulator turned down the request. In a statement, Ogra said that it had significantly slashed SNGPL’s demand for increase in gas prices for FY21.

The reason for the reduction is the stability in rupee-dollar exchange rate along with other disallowances made by the regulator in respect of revenue and capital expenditure.

The authority recomputed the RLNG service cost at Rs26.301 billion (Rs60.15 per mmbu). The petitioner had claimed Rs28.9 billion (Rs72.33 per mmbtu) for the said year.

The petitioner stated that the authority determined the cost of RLNG supply for the year on the basis of total capacity of RLNG system (1,200 mmcfd), resulting in short recovery of Rs2.2 billion.

The authority, in light of the federal cabinet’s decision, revised meter rent to Rs40 per month with effect from September 1, 2020.

It, however, directed the petitioner to recover arrears on this account in three equal installments.