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Wednesday, March 29, 2023

Gas companies ask for 220pc hike in prices

To meet estimated revenue requirement (ERR) during the fiscal year 2021-22, two major gas companies SNGPL and SSGCL have asked for a 220 percent hike in prices with effect from July 1.

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Lahore-based Sui Northern Gas Pipelines has filed formal petitions with the Oil and Gas Regulatory Authority (Ogra), asking for prescribed price for the next fiscal year be increased by Rs1,416 per unit defined in million British thermal unit (mmbtu), including the previous year’s outstanding recovery of about Rs670 per unit.

SNGPL has also demanded an additional revenue requirement of Rs367bn, including last year’s revenue shortfall of Rs254bn according to announcement made by the regulator. The company has asked for an increase of Rs857 per unit in its prescribed price to meet following fiscal’s revenue shortfall. Rs137.5 per unit increase as cost of service for re-gasified liquefied natural gas (RLNG).

Read More:Addressing Pakistan’s Gas Crisis through Energy Efficiency

The current price approved by by Ogra for SNGPL, which supplies gas to Punjab and Khyber Pakhtunkhwa, is around Rs645 per mmbtu. If the demand is approved, the prices would go up to Rs2,160.  SNGPL’s exclusive rights over its franchise areas of Punjab and KP have expired, but the company has calculated Rs42bn for laying 11,500-kilometre distribution mainlines to connect numerous new towns and villages.

Similarly, Karachi-based Sui Southern Gas Company Limited has demanded Rs153 per unit or 20pc increase in its prescribed price for the next fiscal year, from about Rs779 per unit to about Rs932.

SSGCL had worked out a revenue shortfall of about Rs35bn for the following year to meet its revenue requirement of about Rs252bn against gas and operating cost and return on assets, therefore an increase of Rs110 per unit in prescribed price with effect from July 1. The cost of gas is connected to international price of crude oil or fuel in accordance with the government’s agreements with gas producers.

SSGCL has also predicted the RLNG cost of service at Rs16.7bn or 43.38pc per unit with effect from July 1. Like SNGP, SSGCL’s exclusive rights in its franchise areas of Sindh and Balochistan have also expired under its license. However, it has still projected Rs1.044bn for laying 278km distribution mainlines to connect various new towns and villages.

Earlier, OGRA had allowed only Rs13.42 per unit increase in SNGPL’s prescribed price against its demand for a 123pc increase. The increase was decided at the request of the gas utility keeping in mind its ERR for the financial year 2020-21. The regulator said it provisionally determined the shortfall in revenue required for SNGPL at Rs4.35bn after working out its revenue. The company has now announced that the previous revenue shortfall has since then gone up to Rs254bn pending a policy decision by the government.