Govt may approve up to 214pc hike in gas prices

ISLAMABAD: The Petroleum Division on Monday sought the federal cabinet’s Economic Coordination Committee’s (ECC) approval for a 192 per cent hike in gas prices for domestic consumers of Sui Northern Gas Pipelines Limited (SNGPL) and 214 per cent increase for domestic consumers of Sui Southern Gas Company (SSGCL) in an apparent bid to meet the revenue shortfall of both companies for fiscal year 2019-20.

Documents available with Pakistan Today disclosed that the Petroleum Division has forwarded a summary to ECC in this regard and the new tariffs will come into effect from February 1, 2020, once approved.

Similarly, a 136 per cent and 153 per cent increase in prices for the old fertilizer plants lying in the jurisdictions of SNGPL and SSGCL respectively, and a 3 per cent surge for new fertilizer plants situated in SNGPL’s jurisdiction have also been proposed. However, new fertilizer plants located in SSGCL’s jurisdiction would remain unaffected.

Staying on the same lines, general industries of SNGPL are likely to experience a 32 per cent price hike, however, those in SSGCL’s jurisdiction would be given a relief of 4 per cent. Zero rated industries in the northern and southern areas of the country would likely see a 71 per cent price hike and 4 per cent reduction in gas price, respectively.

For captive power plants situated in the jurisdiction of SNGPL, the Power Division proposed an increase of 32 per cent and for those SSGCL’s jurisdiction, a 4 per cent reduction may be on the cards.

Furthermore, a 32 per cent hike is proposed for CNG sector of SNGPL while 4 per cent decrease for SSGCL’s CNG sector is proposed. Moreover, 32 per cent hike for the commercial sector of SNGPL while 4 per cent decrease for the commercial sector of SSGCL is proposed in Petroleum Division’s summary.

According to the summary presented to the ECC, the government has also proposed a significant increase from Rs20 to Rs80 as meter rent for domestic consumers while a hike of up to 245 per cent, 221 per cent, 153 per cent and 32 per cent was also proposed for SNGPL’s special commercial consumers, commercial consumers, fertiliser sector and captive power plants, respectively.

It may be mentioned here that the document submitted to the ECC point out that both of the country’s gas companies are engaged in gas purchase from exploration and production (E&P) companies in addition to the transmission, distribution and sale of gas to various categories of consumers. In accordance with Section 8 of OGRA Ordinance 2002, revenue requirements these companies are determined by OGRA which, in its decision dated December 11, 2019, determined the revised estimated revenue requirement for FY2019-20 of SNGPL and SSGCL as Rs274.2 billion and Rs289 billion, respectively. Whereas, the present sectoral gas sale prices could generate total revenue of Rs227.9 billion and Rs272.4 billion for the companies, resulting in a projected revenue shortfall of Rs30.8 billion and Rs2.9 billion respectively.

“The OGRA Ordinance, 2002, empowers the federal government to advise category wise gas sale prices to OGRA for notification in the official gazette within 40 days of its decision i.e. January 20, 2020,” a Petroleum Division’s summary read.

According to the Petroleum Division, OGRA’s recommendations have been examined and the department has worked out the revision in sector wise gas sale prices which would generate total revenue of Rs534.1 billion.

As per the summary, domestic consumers would be liable to pay an increased meter rent as the price of Rs20 was established back in 1997.

Similarly, power sector tariff increase by 12 per cent while captive power other than zero rated and CNG 15 per cent increase, and minimum billing volume for domestic and special commercial consumers (roti tandoors) may be revised from 40cm per month to 50cm per month for which the bill against gas charges will be Rs220 per month. Moreover, minimum monthly charges will be determined by OGRA considering consumption of 140cm per month for bulk domestic, commercial sectors, ice factories and 1,000cm per month for other sectors using average GCV (gross calorific value) of system gas in the country.

The summary also revealed that the prices approved for gas consumers will also be made applicable for fertilizer and power sector consumers to whom gas is supplied directly from fields by Mari Petroleum Company Limited (MPCL) and Pakistan Petroleum Limited (PPL). The sale price of gas for Liberty Power supplied by SNGPL and for Uch Power supplied by OGDCL will be determined in accordance with already approved pricing formula(s).

It is pertinent to mention here that if the upcoming ECC meting approves the proposed hike in gas prices then this would be the third massive surge in gas prices under the Pakistan Tehreek-e-Insaf (PTI) government’s rule.

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Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected]
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