33pc increase in gas tariff

Islamabad: Having missed the legal and regulatory deadlines, the Oil and Gas Regulatory Authority (Ogra) has started deliberations and public hearings on petitions of Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL) for an increase in gas tariff by 15 and 33 per cent, respectively.

The public hearing of the SNGPL petition for an average 33pc increase in its prescribed price would be held on Jan 16 in Lahore and that of SSGCL for a 15pc increase on Jan 24 in Karachi.

Interestingly, the two companies, the government and Ogra have yet to complete the legal process required for tariff revision which under the law is to take effect on Jan 1 and July 1 every year.

As a consequence, the companies will not be able to meet a corporate regulatory requirement of the company law under which half-yearly and yearly financial results are to be announced. The federal government, the official said, would have to make some special arrangements for regulatory exemptions to overcome the legal complications.

While SSGCL has proposed to keep the tariff for domestic users and fertiliser sector unchanged, SNGPL with its operations in Punjab and Khyber Pakhtunkhwa has demanded up to 125pc increase for some categories, even though it sought an average hike of about 33pc.

The two companies have attributed the required increase to rupee depreciation and rising expenditures which also include tens of hundreds of fresh connections despite acute gas shortage.

The SNGPL has sought an increase of Rs132 per MMBTU over Rs410. In its petition, the company said it faced a revenue shortfall of about Rs40 billion during the Jan 1 and June 30 period next year, although it would provide 500,000 new domestic connections at an estimated cost of Rs5 billion during the current fiscal year. On the other hand, SSGCL has proposed Rs62 per unit or about 15pc increase in its average prescribed price. It has sought no raise for domestic consumers, religious buildings, hostels, tandoors and Fauji Fertiliser.

Both the companies want 7pc system losses and theft recovered from consumers, although Ogra previously allowed them 5pc losses recovery. Despite seeking 7pc allowance for losses, SNGPL insisted it would face a shortfall of Rs7bn and SSGCL said Rs2.4bn because of system losses. The two gas companies had challenged in the court Ogra’s previous determination allowing 5pc losses in tariff calculation on the grounds that Ogra did not have the quorum legally required to take regulatory decisions. They succeeded in obtaining stay orders.