Islamabad: The Oil and Gas Regulation Authority (Ogra) on Wednesday asked the government to issue policy guidelines for setting the Unaccounted for Gas (UfG) benchmarks for the Sui Southern Gas Company Ltd (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL) for the fiscal year 2013-14.
An increasing trend of gas pilferage in the regions affected by a deteriorating law and order situation, as well as, gas theft by non-consumers were mentioned in the letter as reasons for Ogra’s request.
“Suitable policy guidelines may be provided under the Section 21 of Ogra Ordinance, 2002 in order to address the issues, both for the FY2013-14, as well as with a specific reference to FY2012-13, decision of which is still pending,” the letter stated.
After the authority fixed the UfG benchmarks, the gas losses of SNGPL and SSGCL, which were hovering around 10 per cent to 11 per cent, decreased considerably over the next few years, according to documents that were made available.
Both the gas companies, however, were unable to sustain the decrease in the UfG, which subsequently started increasing, and reached in case of SNGPL to 13.07pc and 8.96pc in the case of SSGCL for FY2012-13.
Concurrently, the two companies had repeatedly requested Ogra to revise UfG benchmarks, citing several reasons, including the shift of gas sales from bulk to retail consumers, deteriorating law and order situation in various regions, an increase in gas prices, an increase in gas thefts by non-consumers, and the aging pipeline network.
The regulatory authority also asked the government to grant a subsidy amounting to Rs8 billion to avoid burdening the masses.
The first option it suggested was the granting of a subsidy of Rs8bn to the gas companies to meet the shortfall instead of shifting the financial burden on to the consumers.
Another option suggested was that the government may take appropriate remedial measures in cooperation with the provinces for adjusting the financial impact of the losses sustained due to gas thefts occurring as a result the worsening law and order situation.