Caretaker govt fails in recommending gas prices proposed by OGRA

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ISLAMABAD: Two state-owned gas utilities, SNGPL and SSGCL are facing with severe financial constraints while the caretaker government has so far not taken a decision about the new gas prices despite the passing of 40 days to a decision by the Oil and Gas Regulatory Authority (OGRA) in this very regard.

Interestingly, following a decision by OGRA about the new gas prices, the federal government is bound to issue an advice to OGRA about new gas prices in 40 days as per OGRA Ordinance. And, in case of absence of advice from the government, OGRA is bound to issue an average gas price notification. However, chairperson OGRA Uzma Adil Khan is also reluctant to implement OGRA Ordinance while Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL) are facing serious financial problems. The only solution lies with the government in the form of subsidy if it is interested in avoiding a price hike after a decision to increase gas prices by OGRA.

At present, SNGPL and SSGCL are financing various gas projects with loans obtained from banks. But, if OGRA’s decision of increasing gas prices by 30 per cent to 300 per cent is implemented, the two gas companies will be able to earn revenue worth Rs160 billion and mitigate their financial woes. However, so far, the caretaker government has not issued any recommendations to OGRA regarding new gas prices.

Sources well-aware of the matter said that although OGRA has already taken a decision of 30 to 300 pc hike in gas prices on 21st June, 2018, however, Chairperson OGRA Uzma Adil Khan is ostensibly not willing to issue notification of hike in gas prices apparently to avoid annoyance of next government of Pakistan Tehreek-i-Insaf (PTI). And, caretaker government has left the matter for the upcoming government to take a decision in this regard though OGRA Ordinance does not permit for this.

Earlier, the Oil and Gas Regulatory Authority (OGRA), while giving a hike of Rs234 per Million British Thermal Unit (MMBTU) in the average gas price had set the new gas price at Rs629/MMBTU. In a decision dated June 21, 2018, OGRA had approved the hike in the gas prices by 30 to 300 per cent for the domestic category of gas consumers while apprving a 30 per cent increase for gas consumer’s category of commercial, industrial, CNG, fertiliser and power sector.

It is relevant to mention here that the Oil and Gas Regulatory Authority (OGRA) while jacking up gas prices for domestic consumers by 300 per cent and 30 a per cent record increase for commercial, industrial, power and other sectors has raised average gas price by Rs234 per Million British Thermal Unit (MMBTU) and fixed the new gas price at Rs629/MMBTU. And, with effect to this OGRA’s decision, it is estimated that the masses will have to bear Rs160 billion heavy burden.

Sui Northern Gas Pipelines Limited (SNGPL) will collect Rs11 billion from its consumers and Southern Gas Company Limited (SSGCL) will collect Rs10 billion on account of gas theft and leakages. Similarly, to gain public/voters sympathy during upcoming general elections 2018, the former PML-N government launched new gas schemes.

Although former Pakistan Muslim League-Nawaz (PML-N) government artificially maintained the gas price for the last four years, ex-Prime Minister Shahid Khaqqan Abbasi at the end of the constitutional tenure of his government during the month of May 2018 has approved to collect Rs117 billion from gas consumers in four instalments.

Sources said OGRA has forwarded a copy of the decision about the new gas prices to the federal government and also made it clear that no change will be made in the said decision of OGRA regarding the gas price hike.

A copy of the OGRA decision has further transpired that the gas consumers of the country will have to bear burden due to no change in gas prices during the last four years. More, provision of cheapest gas to domestic gas consumers has been ended as the gas tariff for domestic gas consumers has been increased by 300 %  to end the discriminatory attitude towards other gas consumers deprived of a natural gas facility.

OGRA in its new decision has made a 50 per cent increase in the gas price and fixed it at Rs314/MMBTU for the first slab of domestic consumers, while OGRA has jacked up the price by 300pc for the second slab and fixed the price for the second slab at Rs629/mmbtu, and price for the third slab has been set at Rs629/MMBTU after a 30 per cent increase.

Furthermore, the tariff for Roti Tandoor has witnessed 300 per cent increase, the tariff for the gas to be used in general industry, power sector, cement, CNG and fertilizer plants has been increased by 30 per cent with the approval of OGRA.

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