Proposed tariff regime hasn’t eroded stock prices of SNGPL, SSGC, says: OGRA

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ISLAMABAD: The proposed tariff regime for natural gas sector hasn’t eroded share prices of state-owned gas utilities Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company (SSGC), said Oil and Gas Regulator Authority (OGRA) on Tuesday.

Called these claims of both SSGC and SNGPL as outlandish, OGRA said investor reaction was dependent on speculation, reported Express Tribune.

OGRA Chairperson, Uzma Adil Khan in a press conference on Tuesday revealed the watchdog had got information that some quarters were exploiting the suggested gas tariff mechanism for their own interests.

Ms. Khan said share price of SSGC and SNGPL were going down due to current economic situation and wasn’t linked to draft Third Party Access Rules 2017 and suggested tariff regime.

While answering accusations regarding favouring gas utilities by fixing 17-17.5 percent rate of return at cost of consumers, Ms Khan said the return had been based on supposition of two companies meeting the efficiency benchmark.

She added, this was an old practice as per situation demanded but now the dynamics had altered after LNG imports and now a market-based tariff will get formulated.

Furthermore, Ms. Khan stated these gas companies were voicing opposition to this suggested tariff regime, as they were earlier getting a fixed rate of return and were afraid their profitability would get impacted.

SSGC and SNGPL have been promised the new tariff regime implementation wouldn’t be impacted and was in line with market norms considering the current situation. And licences will also be given to entities for marketing gas under third-party access rules, Ms Khan said.

During the consultative session, OGRA Executive Director (Finance) talked about the tariff regime, whereas a World Bank Consultant provided a presentation about third party access rules and network code.

OGRA Chairperson shared consultative sessions had been undertaken in all provincial capitals and feedback received from relevant stakeholders would be analyzed. She added, all valid arguments will be added to the finalized report, which would be released in consultation with the federal government.

Ms. Khan concluded, saying OGRA will formulate market-based rules which not only would address concerns of various sectors, but also the end consumers as well.