ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has expressed concern over unviable gasification schemes in the service network of two gas companies amid declining supplies.

In its determination on review of estimated revenue requirement for the financial year 2021-22, the regulator said the Lahore-based Sui Northern Gas Pipelines Limited (SNGPL) had projected Rs10.24 billion for service lines for provision of 1.2 million new domestic connections.

However, the targets along with the budgeted amount have now been revised by the company and accordingly Rs2.56bn against Rs300,000 domestic connections had been requested for consideration by the regulator.

The company said that keeping in view the huge number of pending applications (about 3m), 1.2m connections were proposed at the time of application but due to limited availability of system gas, request for installation of 300,000 new gas connections had been made to provide gas connections in already gasified areas and localities where network had already been commissioned.

It also contended that more than 400,000 new domestic connections per year on average have been installed during the past five years. It said the new gas connection targets had been revised keeping in view the fact that first quarter of the financial year passed in finalisation of budget and the remaining time was not sufficient to achieve the earlier proposed target, particularly because of limited availability of required material.

The regulator noted that the target for new connections had been reduced to one-fourth of the figures projected at the time of original petition for the year without giving any tangible reasons. Moreover, the company had not accounted for its physical and financial capacity while projecting such exaggerated figures which had direct financial impact on the consumers.

“The revision of targets without any tangible reasons further raises a question on the criteria being followed by the petitioner for setting, planning and budgeting for new gas connections. Pressure drops and interruption in gas supply is continuously reported in the system and the situation worsens in winter months,” held the regulator.

Ogra said that it had repetitively asked the SNGPL to resolve such issues on priority and plan its network growth in a systematic manner to avoid such situations adversely affecting the existing consumers. “The petitioner, however, seems to pay no heed to address these issues,” the regulator wrote.

Therefore, keeping in view the current energy crisis prevailing in the country and considering all aspects noted, the regulator devised a proper framework for execution of distribution development projects along with provision of new gas connections in consistent with legal position to ensure energy sustainability and security for existing and prospective consumers.

Regarding the Sui Southern Gas Company Limited (SSGCL), the regulator said the company had projected Rs1.336bn against 133,976 gas connections out of which Ogra had allowed only Rs243m to the extent of industrial and commercial consumers on RLNG.

“No amount has been allowed for installation of domestic connections,” it said, adding that the company presumed that the new connections for the domestic sector had been allowed subject to certain conditions.

The SSGCL claimed that it was obligated to provide gas connections subject to completion of necessary formalities and reported that 129,497 new connections had been provided during FY2020-21 which authenticated its capacity to undertake 133,976 new gas connections in FY2021-22. Therefore, it requested for having a fiscal space with upfront allowance of Rs1.336bn and any variation could be subject to actual performance and adjusted in final revenue requirement later.

Ogra held that it had already granted approval in principle for provision of gas connections in the domestic category in 2021-22 and expected of the company to provide gas connections while ensuring maintenance of balance in its system which must commensurate with the available gas supply in line with the performance and service standards.

Published in Dawn, March 9th, 2022