Increasing living cost: For New Year, gas prices jacked up by 6.14%

OGRA raises limit of gas connections from 0.25 to 0.4 million at PM’s request.

ISLAMABAD:

The government appears to have put a dampener on New Year festivities by announcing a 6.14% increase in natural gas prices for all consumers.

The increase, effective from January 1, 2013, was announced through a notification issued by the Oil and Gas Regulatory Authority (Ogra) on Monday. It will remain applicable for the next six months: from January to June 2013.

According to the notification, domestic consumers using 100 units of gas per month will face a hike of Rs6.14 per mmbtu, Rs12.28 per mmbtu for users of 300 units per month and Rs30.69 per mmbtu for users of over 300 units per month. Mosques, seminaries, Imambargahs and other places of worship will pay domestic rates of gas.

Earlier, the government had fixed a flat rate of Rs3,500 per month for mosques and seminaries. The managements of different mosques and seminaries had protested, forcing the government to withdraw the decision.

The government has raised the tariff by Rs36.83 per mmbtu for commercial consumers, Rs28.23 for industrial consumers, Rs37.96 for the CNG industry, Rs42.97 for cement factories, Rs7.14 for fertiliser units and a Rs28.23 per mmbtu hike for the power sector.

The new tariff for domestic consumers using 100 units is Rs106.14, Rs212.28 for 300 units and Rs530.69 per mmbtu for users of over 300 units per month. The new applicable tariff for commercial consumers stands at Rs636.83, ice factories Rs636.83, Rs656.52 for the CNG sector, Rs742.97 for cement factories and Rs 488.23 per mmbtu for the power and industrial sectors.

In a summary forwarded to the petroleum ministry, Ogra had determined a gas prices increase for the Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC) by 9.87% and 6.14%, respectively.

With the new prices, Ogra had tightened the noose around the SNGPL by slashing the rate of Unaccounted for Gas (UFG) losses. The SNGPL is currently facing 11% UFG losses due to gas theft and leakages.

Since the fiscal year 2009-10, the SNGPL and SSGC had been recovering 7% of the losses from consumers despite the 5% benchmark, due to a controversial decision taken by former Ogra chairman Tauqeer Sadiq.

“Ogra has now reduced the UFG ceiling from 7% to 4.5% for the SNGPL, while the SSGC will continue recovering 7% of UFG losses from consumers due to a stay order from court,” said an Ogra official. Ogra has allowed the SNGPL to initiate a programme at a cost of Rs1.5 billion to control UFG losses.

In October, Prime Minister Raja Pervaiz Ashraf had directed Ogra to allow the SNGPL give out 0.4 million new gas connections before the upcoming general elections.

Consequently, Ogra has raised the limit of gas connections from 0.25 to 0.4 million in an effort to bring more consumers under the net of gas supply. “We have allowed the utility to increase the number of gas connections limit to end discrimination between consumers,” an official said.

Experts, however, said the decision to provide new gas connections will further deepen the snowballing crisis unless new reserves are found.

Ogra has also allowed an increase in the salaries of workers, who receive Rs4,000 per month. After the revision of the human resources bench mark, they will receive Rs6,000 to Rs8,500,” said the Ogra official, adding that the salaries of executives have not been increased.

Published in The Express Tribune, January 1^st, 2013.