ISLAMABAD: State-owned gas utilities, Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGCL), have requested the Oil and Gas Regulatory Authority (OGRA) to approve up to 220 per cent increase in the prescribed prices of gas with effect from July 1 to meet estimated revenue requirement (ERR) during the fiscal year 2021-22 (FY22).
According to sources, consumers should get ready to bear the price hike as the two sui gas companies have asked OGRA to grant permission to charge gas consumers with approximately over Rs100 billion additional burden.
In formal petitions filed with OGRA, SNGPL has demanded that its prescribed price for the next fiscal year be increased by Rs857.40 per million British thermal unit (mmbtu) to recover roughly above Rs 71 billion from its gas consumers.
Similarly, SSGCL which supplies gas in Sindh and Balochistan provinces has proposed a hike by Rs109.78 per mmbtu, which will help the utility to recover roughly Rs34.9 billion from consumers.
According to OGRA, the breakup of SNGPL’s projected prescribed price in respect of natural gas has highlighted a total revenue requirement of Rs283,099 million, Rs71,199 million as a total shortfall in revenue requirement, while the previous year’s revenue shortfall of Rs254,108 million and Rs857.40 per mmbtu increase in revenue requirement w.e.f July 1.
The SNGPL has projected an increase of Rs1,416 per mmbtu, including the previous year’s shortfall of Rs670per mmbtu whereas the cost of Re-gasified Liquefied Natural Gas (RLNG) diverted towards the domestic sector has also been claimed at Rs27,940 million.
Similarly, the petitioner has projected an increase at Rs137.5 per mmbtu with effect from July 1, as the cost of services for RLNG business for FY22.
Moreover, the exclusive rights held by the petitioner in its franchise areas, Punjab and Khyber Pakhtunkhwa, have expired as per its license; however, the petitioner has projected Rs42,093 million for laying a 11,500 km distribution line to connect various new towns and villages.
According to SSGCL’s activity-wise shortfall in respect of revenue requirement of indigenous gas, the total revenue requirement will be Rs251,596 million while the total shortfall will be Rs34,994 million whereas the increase in revenue requirement from July 1 will be Rs109.78 per mmbtu for FY22.
According to OGRA, the revenue requirement of the petitioner will enable it to meet the cost of gas, operating cost and return on assets. The cost of gas is linked to the international price of crude oil in accordance with the agreements between the federal government and gas producers.
Besides the above, SSGCL has estimated RLNG cost of service at Rs16,715 million or Rs43.38 per mmbtu.
The exclusive rights held by SSGCL in its franchise areas has also expired as per the respective license while the utility has projected a cost of Rs1, 044 million for laying of 278 km distribution mains to connect various areas.
OGRA has invited all the interested and affected persons, including gas consumers and the general public to furnish their comments, suggestions and interventions in terms of Rule 7 of the Natural Gas Tariff Rules, 2002. The authority will make a final decision in this regard after holding public hearings on the said matter.
It is pertinent to mention here that the government has, to some extent, already decided to jack up electricity prices to meet the conditions set by the International Monetary Fund (IMF); if the proposed gas price hike is approved, the masses will have to bear heavy jolts in the form of gas price hike in a little above three months.
Please give details of how the price is projected to increase by 220%. The various numbers as given in the article do not provide sufficient details about the calculation method used.