In a bid to generate Rs55 billion to bail out gas utilities, the Oil and Gas Regulatory Authority (Ogra) has approved a raise in gas prices for consumers of the Sui Southern Gas Company (SSGC) and the Sui Northern Gas Pipeline Limited (SNGPL).
Out of the total Rs55 billion, an amount of Rs19 billion will be recovered from Sindh and Khyber Pakhtunkhwa (K-P) provinces on account of Gas Development Surcharge (GDS) whereas remaining Rs36 billion will be passed on to the gas consumers next year.
Ogra has moved the decision to the petroleum ministry for implementation.
The regulator approved increase in gas prices by approving final revenue requirements for year 2012-13 and 2013-14. These decisions were pending due to lack of quorum following removal of Orga’s former chairman Tauqeer Sadiq.
Ogra approved increase in gas tariff by Rs12 per Million British Thermal Unit (mmbtu) for year 2012-13 for the SNGPL. However, this increase will be adjusted by receipt of Rs6 billion for Sindh and the K-P on account of the GDS.
It approved Rs37 per mmbtu increase for year 2013-14 which will be passed on to the consumers of the SNGPL in the upcoming year. The SNGPL will collect Rs18 billion in revenue from this increase.
The regulator has approved hike in tariff by Rs38 per mmbtu for SSGC consumers for year 2012-13. This increase will be adjusted by Rs13 billion from accounts of Sindh and the K-P. However, it has approved Rs52 per mmbtu for year 2013-14 for the SSGC consumers. Its impact is also Rs18 billion which has been carried forward for the next year which will be recovered from the gas consumers.
Ogra had allowed Unaccounted for Gas (UFG) by 4.5 per cent to the SNGPL. However, it allowed the SSGC to recover 7 per cent UFG from the gas consumers due to stay order obtained by the gas company.
An official said Ogra had not implemented policy guidelines issued by federal government to bail out gas companies to pass on Rs49 billion to the gas consumers. He said it had been subject to the completion of study being conducted on the UFG of two gas companies. “The situation of SNGPL is worse and it can go bankrupt due to higher UFG losses,” he said.
Federal government wanted Ogra to change bulk retail ratio of gas consumers based on year 2003 but the regulator was reluctant to do so. He said the retail consumers had increased compared to bulk consumers, resulting in an increase in the UFG rate. The SSGC is facing higher losses in Balochistan.
Published in The Express Tribune, November 11th, 2015.