The Ministry of Petroleum and Natural Resources has drawn up a new plan aimed at pushing up the unaccounted-for-gas (UFG) ceiling of gas distributing companies, which will allow them to increase revenue collection from consumers, sources say.
However, the rise in the ceiling will be based on a condition that says that the money injected into the utilities will not be distributed among shareholders and will be spent on saving the companies in extremely difficult conditions.
The Economic Coordination Committee (ECC) of the cabinet, in its next meeting, will take up the ministry’s proposed plan of issuing new policy guidelines to the Oil and Gas Regulatory Authority (Ogra) to determine revenue requirements of the gas utilities.
“The petroleum ministry has conducted a study that indicates that gas utilities – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) – will go bankrupt if policy guidelines are not issued for increasing the UFG benchmark,” a government official commented.
Ogra – the oil and gas industry regulator – has allowed 4.5% UFG to SNGPL for financial year 2014-15 that it can recover from the consumers to make up for the loss caused by gas theft and leakage. SSGC, on the other hand, has won a stay order from court and is keeping the UFG level at 7%.
“The petroleum ministry wants to revise the UFG ceiling and the money pumped into the companies will not be distributed to shareholders, rather, it will be kept in the companies to help them avoid bankruptcy,” the official said.
Ogra was to introduce a new gas tariff regime following a study but no research work had been undertaken in the last several years, he added.
In a summary sent to the ECC, the petroleum ministry has proposed that the following should be provisionally allowed as gas sales volumes for UFG benchmarking.
Volume pilfered by unregistered consumers but detected and determined by the companies, volume against the minimum billing amount charged from domestic consumers, volume consumed in law and order-stricken areas and impact of change in the bulk-retail ratio on UFG using 2003-04 as the base year.
However, the ECC is finding it hard to give its clearance following pressure from the National Accountability Bureau (NAB), which is dealing with an Ogra scam in an accountability court pertaining to the increase in UFG ceiling by the previous government of Pakistan Peoples Party (PPP).
NAB insists that Ogra should recover from the utilities the extra bill charged from the consumers after the rise in UFG ceiling from 5% to 7% that amounts to Rs49 billion.
However, the government official cautioned if the utilities were forced to return the amount, they would go bankrupt immediately and gas supply may come to a halt.
According to officials, after implementation of the policy guidelines proposed by the petroleum ministry to bail out the gas distributing firms, gas prices will go up by Rs35 per million British thermal units (mmbtu).
Published in The Express Tribune, August 30th, 2014.
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