Tussle ends: Work resumes on politically backed schemes

OGRA approves tariff increase to finance schemes.


Express September 26, 2011

ISLAMABAD:


After facing pressure from the federal government, the Oil and Gas Regulatory Authority (Ogra) has allowed gas utilities to resume parliamentarians’ development schemes under Prime Minister Yousaf Raza Gilani’s directive despite the country facing severe energy shortage. The move has been termed a path to make political gains for the upcoming elections, sources said.


In a bid to generate funds to finance the political schemes, Ogra allowed SNGPL to raise gas tariff up to Rs 15 per Million British Thermal Unit (mmbtu) and Sui Southern Gas Company to hike rates by Rs5 per mmbtu.

The government has already raised gas tariff by 13.55 per cent, to meet revenue requirements of gas companies, in less than three months of the current financial year.

The regulator had decided on May 24 that new development phases will be included in the asset base if a gas company can establish additional gas supply.

After this decision, Ogra faced strong criticism from many political fronts including the petroleum ministry, prime minister’s secretariat and parliamentarians that forced gas companies to move petitions seeking permission to resume the new development schemes.

Development of new town and villages is being carried out following the prime minister’s directives, the authority observes.

The regulator, therefore, decides to allow future development phase, Ogra’ decision said.

The National Assembly’s Standing Committee on Petroleum and Natural Resources was informed last month that gas companies had sought a 17 per cent increase in the gas tariff to finance parliamentarians’ development schemes for which funds were not allowed in May 24 decision.

Officials of Oil and Gas Regulatory Authority (Ogra) and Sui Northern Gas Pipelines Limited (SNGPL) representative Jawad Naseem challenged each other over the decision of Ogra to halt the ongoing development schemes of the parliamentarians. Naseem said that SNGPL had no funds to complete the ongoing projects because Ogra had halted the development schemes but an Ogra official said that the authority had not stopped the ongoing development schemes.

Gas utilities had sought an increase in gas tariff to finance parliamentarians’ gas development schemes which is violation of the rules, sources said. They can’t ask for an increase when they have failed to provide gas to existing consumers, sources added.

Rules say that gas utilities cannot launch new schemes if they have failed to provide gas to existing consumers. The expansion of the distribution network will also reduce gas supply to all consumers, which will ultimately lead to economic distortion, source said.

Published in The Express Tribune, September 27th, 2011.

 

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