Achi news desk-
- Ogra’s decision is expected after a public hearing in Peshawar.
- SNGPL aims to raise the average gas price to Rs4,446.89 per mmbtu.
- The company faces a projected revenue shortfall of Rs189.18bn.
ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) is convening a public hearing in Lahore on Monday (today) on a petition submitted by Sui Northern Gas Pipeline Limited (SNGPL), seeking a whopping 147% hike in gas prices for the Fiscal. Year 2024-25.
If the proposed third increase is allowed within a year, it is predicted that it will significantly raise inflation rates and overburden the poorer sections of society.
The SNGPL, which caters to over 7.22 million consumers in North Central Pakistan, mainly in Punjab, Khyber Pakhtunkhwa and Azad Jammu and Kashmir, is facing a projected revenue shortfall of Rs189.18 billion.
The proposed gas price hike is expected to take effect from July 1, 2024.
The company aims to raise the average gas price to Rs4,446.89 per Million British Metric Thermal Unit (mmbtu), reflecting an increase of Rs2,646.18 per mmbtu.
The forecast price of Rs4,446.89/mmbtu covers the previous year’s shortfalls in the natural gas business. Moreover, the SNGPL has claimed that the cost of service for regasified liquefied natural gas (RLNG) is Rs325.08 per mmbtu for the same period.
Following the Lahore hearing, the Ogra would convene another session in Peshawar on March 27, with the regulator believing it would give stakeholders, consumers and the public enough opportunity to voice their grievances.
The decision on the matter would be taken by Ogra after the public hearing in Peshawar is over.
Plea of ​​SSGC
The Ogra, previously on the 18th and 20th of this month, held public hearings in Karachi and Quetta in response to a petition by Sui Southern Gas Company (SSGC).
The SSGC, in its plea, recommended an increase in gas price by Rs274.40/mmbtu, citing an estimated revenue shortfall of Rs79.63 billion.
The company urged OGRA to fix the average price of one mmbtu gas at Rs1,740.80.
The SSGC’s petition covers projections for the average prescribed gas price and RLNG service cost for the financial year, with the aim of covering gas costs, operating costs and returns on assets.
In addition, the SSGC’s petition addresses issues such as gas supply volume projections from local gas fields, measures taken to meet the country’s growing demand for energy and infrastructure investments to connect new areas.
In a related development, the textile industry has decided to challenge the huge hike in gas tariff sought by the SNGPL.
Industrialists to oppose hike
During the Ogra hearing, All Pakistan Textile Mills Association (Aptma) and Lahore Chambers have decided to fully oppose SNGPL’s petition.
The Aptma would question all the assumptions and projections in the petition about the RLNG diversion to the domestic sector in 2024-25 and also about the projection claimed under the cost of gas, including the RLNG and LPG Air Blend Subsidy at Rs702.411 billion.
The textile industry has also decided to undertake the Sui Northern on high UFG (unaccounted gas) in its network which is at 12%, 5-6 times higher than international benchmarks.
The SNGPL is seeking diversion cost of Rs298 billion in the petition, about $1 billion, with cross-subsidy​​​​to be borne by industries, assuming that SNGPL plans to expand its network, spending tens of billions of rupees to increase domestic consumption, leading to higher. service costs and increased domestic RLNG diversion. For this, the Northern Sui will expand the pipeline infrastructure with a working capital of Rs56.754 billion.
The textile industry would also seek the rationale behind the cost of LPS (late payment surcharge) and Working Capital (Rs125.3 billion) and the reason and justification for demanding huge operating expenses against LPS payment to creditors and financing cost for working capital Rs125. 322 billion in the background of revision of regular gas sale prices by the federal government.
During the hearing, it would also seek evaluation of capital expenditure amounting to Rs21.520 billion and revenue expenditure amounting to Rs1.949 billion claimed for UFG management activities in view of 7.25% UFG projected by the company.
Domestic sector consumption in SNGPL network increased by more than 4% from 310 BCF in FY2022 to 323 BCF in FY2023 with highest UFG rates and cost of service.
Originally published in The News
