Due to devaluation of Rupee and increase in international oil prices, locally produced Natural Gas will become expensive from July 1st. Oil and Gas Regulatory Authority (OGRA) will announce the new gas prices soon.
This was announced by OGRA Chairperson Uzma Adil Khan in a statement issued on Thursday. The statement said that Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) applied for an increase in gas price based on One Million British Thermal Units (MMBTU).
Uzman Adil said that SNGPL and SSGCL filed their petitions on 29th December 2017 and February 28th 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 Rs 356.89/MMBTU in its average prescribed price w.e.f 1st July 2018.
SSGCL requested for an increase of Rs. 109.03/MMBTU in its tariff w.e.f 1st July 2018 for the year 2018-19.
In their petitions, both companies claimed that the new tariff is demanded on the basis of 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. Another reason is the devaluation of Rupee against US Dollar.
On these petitions, Uzma Adil Khan chaired public hearings in Peshawar, Lahore, Karachi and Quetta to listen to the objections of the public and other stakeholders. The petitions were to determine the SNGPL’s and SSGL’s estimated revenue requirements/prescribed prices for financial year 2018-19.
The hearings were attended by representatives of various associations, including: representatives of chambers of commerce, members of press and stakeholders like consumers, public, management of the SNGPL & SSGC and other interveners.
Senior Management & Legal Counsel of SNGPL & SSGCL made detailed presentations and gave their reasons for the estimated revenue requirement prices. They also responded to a number of questions raised by participants and interveners.
The participants opposed the petitions saying that OGRA has already allowed an increase in gas prices and any further increase in gas prices shall have adverse effect on gas consumers. It was desired that cross-subsidy mechanism should be abolished and value addition sectors should be preferred for supply of gas.
The participants raised strong reservations and demanded that no relief in UFG benchmark be given on account of gas consumers. It was also stressed that Sui Northern/Southern must endeavor to cut their operating costs to avoid increase in gas prices.
Winding up the public hearings, Chairperson OGRA said that it was the duty of the Authority 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.” Chairperson said.
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.