Energy consumers are bracing for a twin blow as gas tariff and most oil product prices are expected to go up in the next two months.
The Oil and Gas Regulatory Authority (Ogra) has sought an increase of 11 to 14 per cent in prices of gas from next year to generate finances for constructing infrastructure for liquefied natural gas (LNG) import and giving new gas connections in constituencies of different legislators.
According to officials, Ogra sent recommendations to the federal government on Thursday, seeking an increase of 14 per cent in gas tariff for Sui Northern Gas Pipelines Limited (SNGPL) and 11 per cent for Sui Southern Gas Company (SSGC) from January 2012.
If approved, the high tariffs will generate funds for LNG infrastructure projects and gas schemes of parliamentarians.
Sources said SNGPL had sought a tariff increase of Rs118 per million British thermal unit (mmbtu) or 30 per cent while SSGC had demanded a hike of Rs44 per mmbtu or 14 per cent. However, Ogra in its judgment allowed tariff increase of Rs43 (14 per cent) and Rs34 (11 per cent) for SNGPL and SSGC respectively.
With the price hike, SNGPL will be able to receive an extra Rs15 billion for LNG infrastructure projects and Rs10 billion for financing parliamentarians’ schemes. On the other hand, SSGC will get an additional Rs5 billion for gas schemes and it did not seek tariff increase for LNG infrastructure projects.
Monthly oil price revision
Prices of most of petroleum products are expected to rise by 6.9 per cent from the start of next month in line with the trend in the global crude market. However, petrol price may fall by 6.3 per cent, shows a summary prepared by the government taking into account prices of oil so far in November.
Final impact of global oil prices on the domestic market will be clear by the end of the month after including inland freight equalisation margin and cost of transportation in the country.
By November 23, the price of petrol declined by 6.3 per cent to $111.58 per barrel in the international market against $119.06 per barrel last month. However, kerosene oil price increased by 5.3 per cent to $126.62 per barrel against $120.22 last month, high-speed diesel (HSD) by 6.9 per cent to $126.42 per barrel against $118.23 last month, crude oil by 6 per cent to $111.77 per barrel against $105.39 last month.
Furnace oil price also increased by 5.8 per cent to $678.54 per ton compared to $641.19 per ton last month. Pakistan mainly depends on thermal power generation and the hike in furnace oil price will lead to an increase in power tariff.
At the end of October, the government had cut oil product prices by up to Rs5.93 per litre on the back of declining global oil market. Though HSD price should have been reduced by Rs0.18 per litre, the government did not do so and adjusted it in petroleum levy.
At present, prices of high octane blending component stand at Rs106.72 per litre, petrol Rs87.41, kerosene oil Rs85.76, light diesel oil Rs81.99 and high-speed diesel Rs94.15.
Published in The Express Tribune, November 25th, 2011.
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