Gas utility seeks 66% price hike

Files petition for determination of revenue requirement, prescribed prices for FY23

ISLAMABAD:

A public gas utility has sought 66% increase in gas prices for financial year 2022-23.

In that regard, the Oil and Gas Regulatory Authority (Ogra) on Wednesday conducted a public hearing to consider Sui Northern Gas Pipelines Limited’s (SNGPL) petition for the determination of its estimated revenue requirement and prescribed prices for FY23.

The utility projected an average prescribed price of Rs920.88 per million British thermal units (mmbtu), according to a statement.

Moreover, it requested Rs1,172 per mmbtu on account of shortfall in prior years. Thus, the aggregate average prescribed price of Rs2,074.89 per mmbtu was sought, the statement said.

The service cost of re-gasified liquefied natural gas (RLNG) was projected at Rs490.18 per mmbtu with effect from July 1, 2022, including Rs330.68 per mmbtu on account of differential impact of RLNG diversion.

Earlier, parliament passed a bill to introduce a weighted average cost of gas (Wacog), which the CNG sector termed illegal because provinces were not taken on board to seek their consent.

The utility anticipated a revenue shortfall due to the diversion of LNG towards domestic consumers.

However, a private entity challenged the Wacog bill in court, and the Sindh government also recently announced that it had become a party in the case.

The utility has claimed that it has to receive over Rs100 billion from domestic consumers, but it could not recover the amount due to the absence of a legal framework.

SNGPL is a major defaulter of Pakistan State Oil (PSO) that has to pay around Rs278 billion to the latter on account of LNG supply.

In that regard, the utility claimed that the domestic consumers had not yet cleared their bills for the gas they consumed in the winter season.

PSO imports LNG from Qatar and supplies it to SNGPL.

Due to the non-payment of dues by the utility firm, PSO’s total receivables have crossed Rs500 billion for the first time in history.

During the public hearing, a senior leader of the All Pakistan CNG Association opposed the hike in gas tariff, pointing out the irregularities in gas distribution to the consumers.

He was of the view that the Wacog bill was illegal as it could not be implemented without taking all stakeholders into confidence.

“Line losses of gas companies have increased a lot,” he said, adding that the separate UFG (unaccounted for gas) applied to the transmission and distribution of gas was unacceptable.

He urged the authorities concerned to review the pipeline capacity and terminal charges, including retaining charges, on priority “as they have not been reviewed for several years”.

Under the third-party rules, he underlined, there should be a uniform tariff for all companies and sectors, adding that there should be no discrimination.

Published in The Express Tribune, March 31^st, 2022.

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