Participants oppose gas price increases for SNGPL and SSGCL

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ISLAMABAD: Opposing SNGPL’s and SSGCL’s plea to increase their gas prices for the financial year (FY) 2018-19, participants of OGRA’s hearing have desired an end to cross-subsidy mechanisms, and the value addition sectors should be preferred for the supply of gas.

Oil and Gas Regulatory Authority (OGRA) Chairperson Uzma Adil Khan has chaired public hearings organised by OGRA at Peshawar, Lahore, Karachi and Quetta on petitions filed by Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL).

The petitions were to determine the SNGPL’s and SSGL’s estimated revenue requirements/ prescribed prices for FY2018-19. The hearings were attended by representatives of various associations, representatives of chambers of commerce, members of press and stakeholders like consumers, public, management of the SNGPL and SSGC, as well as other interveners. Senior management and legal counsel of SNGPL and SSGCL made detailed presentations and gave the reasons for their estimated revenue requirement/prescribed prices. They also responded to a number of questions raised by participants/interveners.

SNGPL and SSGCL filed their petitions on 29th December 2017 and February 28, 2018, respectively, under Section 8(1) of OGRA Ordinance 2002 and Rule-4(2) of Natural Gas Tariff Rules 2002 to determine their estimated revenue requirement for FY 2018-19. SNGPL requested for an average increase of Rs356.89/MMBTU in its average prescribed price w.e.f 1st July 2018 while SSGCL requested for an increase of Rs109.03/MMBTU in its tariff w.e.f 1st July 2018 for the year 2018-19.

The increase in prescribed prices were claimed by the petitioners mainly due to projected increase in cost of gas, which is based on the average price of crude oil/fuel oil in the international market, in accordance with the Gas Price Agreements signed between the Government of Pakistan and the gas producers and devaluation of Rupee against the UD dollar.

The authority (OGRA) in order to provide equal opportunity to all the stakeholders decided to hold public hearings at provincial headquarters and accordingly issued notices to all the interested and affected persons.

The participants opposed the petitions saying that OGRA has already allowed the increase in gas prices and any further increase in gas prices shall have an adverse effect on gas consumers. It was desired that cross-subsidy mechanism should be abolished and the value addition sectors should be preferred for the supply of gas.

The participants raised strong reservations on the high UFG level of SNGPL and SSGCL and demanded that no relief in UFbenchmarkrk be given on account of gas consumers. It was also stressed that petitioners must endeavour to cut its operating cost to avoian d increase in gas prices.

Winding up the public hearings, chairperson OGRA said that it was the duty of the athority to balance the divergent interests of utility companies and consumers. The authority will scrutinize all costs with the help of a team of professional engineers, financial and legal experts. He said that OGRA has provided the opportunity to all the stakeholders in the hearings and thanked for their whole-hearted participation in the proceedings and said that their tangible suggestions will be considered while deciding the petitions of SNGPL and SSGCL.

The Oil and Gas Regulatory Authority (OGRA), has been established by the Federal Government under Presidential Ordinance No. XVII of 2002. It, inter-alia, is empowered to determine the revenue requirement of the gas companies.