Govt denies gas consumers tariff relief

Ogra notified new tariff of Rs3,000 per MMBTU, up from previous Rs2,750 per MMBTU

ISLAMABAD:

Gas consumers across the country did not get any relief in the new fiscal year as the Pakistan Muslim League-Nawaz (PML-N) government declined on Monday to pass on cut in the tariff proposed by the Oil and Gas Regulatory Authority (Ogra).

The regulator, on the other hand, announced an increase in prices of liquefied petroleum gas (LPG) from July 1, 2024. According to an Ogra notification, domestic LPG cylinder price has been increased by Rs1.43 per kilogramme.

Earlier, in a decision sent to the federal government, Ogra had slashed gas prices by up to 10% for public utilities, from the financial year 2024-25, starting July 1. The regulator reduced the tariff while determining the revenue requirements of Sui gas companies for the current fiscal year.

However, the government refused to pass on the benefit to the consumers and maintained the existing prices for the financial year 2024-25. Simultaneously, the federal government increased gas prices for general industry (Captive) by raising them by Rs250 per million British thermal units (MMBTU).

Ogra also notified the new tariff of Rs3,000 per MMBTU, up from previous Rs2,750 per MMBTU, from Monday. Ogra said in a statement that the federal government had the sole jurisdiction to fix sale prices for different categories of gas consumers, considering its socio-economic agenda and sectoral policies.

Ogra had recommended an average prescribed price of Rs1,635.9 per MMBTU for Sui Northern Gas Pipelines Limited (SNGPL), reflecting a decrease of Rs179.17 per MMBTU, or 10%, and Rs1,401.25 per MMBTU for Sui Southern Gas Company (SSGC), a reduction of Rs59.23, or 4%.

Ogra had calculated the financial impact of the previous years’ revenue shortfall at Rs580,585 million, compared to SNGPL’s claim of Rs862,612 million. It stated that SNGPL’s total operating income was estimated at Rs691,877 million against the revenue requirement of Rs607,403 million.

This showed a surplus of Rs66,524 million for fiscal year 25. To adjust the surplus, Ogra revised the prescribed price down by Rs179.17 and set the average prescribed price at Rs1,635.90 per MMBTU for the SNGPL.

Separately, the SSGC’s net revenue requirement was estimated at Rs289,501 million, showing a surplus of Rs12,236 million. To eliminate the surplus, Ogra provisionally revised the prescribed price down by 4%, or Rs59.23, and set the average prescribed price at Rs1,401.25 per MMBTU for FY25.

Ogra had sought the advice of the federal government on category-wise gas sale prices. Now, the regulator has received the recommendations of the federal government to maintain the existing gas prices except for the general industry.

Ogra had also requested the SSGC board of directors to take effective measures to reduce the cost of service by closely monitoring the input costs. Additionally, it directed them to expedite recoveries from defaulters and reduce expenses related to doubtful debt, litigation, and associated costs.

It instructed the SSGC to devise and implement an action plan to address factors contributing to unaccounted-for gas (UFG), a term used to denote gas theft and leakage, specifically in Balochistan, and to prioritise the resolution of low gas pressure complaints from consumers in the province.

Moreover, the SSGC was directed to implement the Ogra Gas (Third Party Access) Rules 2018 by finalising overdue agreements or pending applications and to take legal action against non-consumers or illegal connections to reduce overall UFG in its franchise areas.

The regulator directed the SNGPL to submit review petition for its estimated revenue requirement. This review should consider the actual and anticipated changes in the international prices of crude and high sulphur fuel oil from May to November 2024 and the trend in the rupee-dollar exchange rate.

Furthermore, the SNGPL was directed to implement the Ogra Gas (Third Party Access) Rules 2018 by finalising any outstanding agreements or the pending applications.

It also directed for rationalising human resources cost by considering the changing business dynamics and the increased proportion of re-gasified liquefied natural gas (RLNG). It had also called for expediting recoveries from defaulters and curtailing expenses related to doubtful debt, litigation, and related costs.

LPG price

OGRA announced an increase in the LPG prices from July 1, 2024. According to the notification, domestic LPG cylinder price had been increased by Rs1.43 per kilogram. As a result, the new price of a domestic cylinder of 11.8 kg was fixed at Rs 2,769 against old price of 2,768.23.

LPG producers price had been increased by Rs121.75 per ton – from Rs234,595.52 to Rs234,595.52 per ton. Ogra said in a statement that the LPG producer price was linked with Saudi Aramco-CP and US dollar exchange rate.