ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) appro­ved on Thursday up to 14 per cent increase in the average rates for consumers of the Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL).

Ogra has worked out a five per cent increase in the average rates for SSGCL and 14 per cent for SNGPL on the basis of 4.5 per cent unaccounted for gas (UFG) losses.

The authority arrived at the figure for the UFG losses after public hearings in various cities about estimated revenue requirements of the gas utilities. The new rates would be notified after the federal government decides how to distribute the tariff increase among the various consumer categories.

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Meanwhile, the Economic Coordination Committee (ECC) of the cabinet would decide on Friday (today) how to distribute among consumers the Rs50 billon losses of the two utilities for financial years 2010-11, 2011-12 and 2012-13 on account of gas theft, non-recovery due to the poor law and order situation, increase in retail network and sabotage.

The ministry of petroleum and natural resources has recommended that the amount be recovered from the consumers by allowing higher UFG losses (up to 7 per cent) along with theft etc to bail out the gas companies.

The issue is already in various courts including the case involving two former prime ministers and former Ogra chief Tauqir Sadiq in the Rs82bn case of alleged corruption.

In its determination sent to the government, Ogra approved Rs58.29 per mmbtu (million British thermal unit) or about 14 per cent average increase in its prescribed price for SNGPL, to Rs464.94 per mmbtu.

Likewise, the prescribed price for SSGCL has now been determined at Rs469 per mmbtu with an increase of Rs22.9 per mmbtu or 5 per cent higher.

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The government has the power under the law to advice Ogra to fix different rates for different consumer categories like domestic, commercial, industrial, power sector, cement but remaining within the average rate approved by Ogra.

Earlier, Ogra had requested the government to issue a policy advice to recover greater amounts from consumers on account of gas lost due to theft and leakages, effectively bailing the companies out.

This is being seen by many as recognition by both the government and the regulator of the utilities’ inability to control gas losses and to legitimise a change in performance standards. Such a change in standards when made by former Ogra chairman Tauqir Sadiq landed him in legal trouble.

Published in Dawn, July 4th, 2014