SSGC demands 10% increase in gas tariff
OGRA directs company to recover billions of rupees worth of dues.
According to an SSGC official, KESC owes Rs43 billion for gas supply and Pakistan Steel Mills has to pay Rs10 billion. DESIGN: FAIZAN DAWOOD
ISLAMABAD:
Sui Southern Gas Company (SSGC) has sought up to 10% increase in gas tariff for all types of consumers, following a rise in wellhead gas prices, from July this year.
To consider SSGC’s request and seek views of the people, the Oil and Gas Regulatory Authority (Ogra) held a hearing, presided over by the regulator’s chairman, in Karachi on Tuesday.
During the proceedings, the regulator asked SSGC to recover huge unpaid bills of Rs53 billion from Karachi Electric Supply Company (KESC) and Pakistan Steel Mills. SSGC should take immediate measures to recover the dues from defaulters, which were eroding the profitability of the company, Ogra said.
According to an SSGC official, KESC owes Rs43 billion for gas supply and Pakistan Steel Mills has to pay Rs10 billion. “We have sent a notice to the steel mill, warning it of disconnecting gas supply if a significant amount is not paid until April 26,” the official said.
In Balochistan too, SSGC loses much because of poor law and order situation. The official said the company sold 5% of its total supply in Balochistan, but the province contributed 30% to the unaccounted-for gas (UFG) level, a term used to describe gas theft and leakage.
According to a statement issued by SSGC, the company asked for a price increase of Rs31.56 per million British thermal units (mmbtu) for all categories of consumers – domestic, commercial and industrial –from July this year.
At the hearing, SSGC Managing Director Zuhair Siddiqui and senior management of the company were present.
SSGC Counsel Mirza Mahmood pointed out that according to the company’s licence, Ogra should determine the revenue requirement and ensure that the company was able to achieve a minimum 17% return every year.
Ogra had been in continuous breach since the 7% UFG benchmark was introduced, he said.
The counsel argued that the 7% UFG would result in only 2.3% increase in the price of natural gas. “This increase will enhance the gas bill from Rs210 to Rs215 per month for at least 50% of domestic consumers, a very small cost but will save the company, a national asset, from bankruptcy and financial collapse,” he said.
The counsel warned that if present difficult conditions persisted, SSGC, which is well respected for operational efficiency and profit-making, would go the way of other failed institutions like PIA, Wapda or steel mill.
If the Sindh High Court ruled against the company and the price of gas was not increased by Rs31.56 per mmbtu, the entire share capital and reserves of the company would turn into a negative equity of Rs5 billion, he said.
Published in The Express Tribune, April 24th, 2013.
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Sui Southern Gas Company (SSGC) has sought up to 10% increase in gas tariff for all types of consumers, following a rise in wellhead gas prices, from July this year.
To consider SSGC’s request and seek views of the people, the Oil and Gas Regulatory Authority (Ogra) held a hearing, presided over by the regulator’s chairman, in Karachi on Tuesday.
During the proceedings, the regulator asked SSGC to recover huge unpaid bills of Rs53 billion from Karachi Electric Supply Company (KESC) and Pakistan Steel Mills. SSGC should take immediate measures to recover the dues from defaulters, which were eroding the profitability of the company, Ogra said.
According to an SSGC official, KESC owes Rs43 billion for gas supply and Pakistan Steel Mills has to pay Rs10 billion. “We have sent a notice to the steel mill, warning it of disconnecting gas supply if a significant amount is not paid until April 26,” the official said.
In Balochistan too, SSGC loses much because of poor law and order situation. The official said the company sold 5% of its total supply in Balochistan, but the province contributed 30% to the unaccounted-for gas (UFG) level, a term used to describe gas theft and leakage.
According to a statement issued by SSGC, the company asked for a price increase of Rs31.56 per million British thermal units (mmbtu) for all categories of consumers – domestic, commercial and industrial –from July this year.
At the hearing, SSGC Managing Director Zuhair Siddiqui and senior management of the company were present.
SSGC Counsel Mirza Mahmood pointed out that according to the company’s licence, Ogra should determine the revenue requirement and ensure that the company was able to achieve a minimum 17% return every year.
Ogra had been in continuous breach since the 7% UFG benchmark was introduced, he said.
The counsel argued that the 7% UFG would result in only 2.3% increase in the price of natural gas. “This increase will enhance the gas bill from Rs210 to Rs215 per month for at least 50% of domestic consumers, a very small cost but will save the company, a national asset, from bankruptcy and financial collapse,” he said.
The counsel warned that if present difficult conditions persisted, SSGC, which is well respected for operational efficiency and profit-making, would go the way of other failed institutions like PIA, Wapda or steel mill.
If the Sindh High Court ruled against the company and the price of gas was not increased by Rs31.56 per mmbtu, the entire share capital and reserves of the company would turn into a negative equity of Rs5 billion, he said.
Published in The Express Tribune, April 24th, 2013.
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