ISLAMABAD: In another late-night assault, the Oil & Gas Regulatory Authority (Ogra) has asked the government to increase gas tariff by 45 per cent to 50pc for all consumer groups across the country to meet revenue requirement of two gas utilities — Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) — during fiscal year 2023-24.

According to two separate determinations about revenue requirement of the two companies, Ogra asked the government to increase with effect from July 1, 2023 the average sale rate for SNGPL by 50pc or Rs415 per unit (million British thermal units) to Rs1,239 per unit. Similarly, the regulator also worked out 45pc increase in average gas rates for SSGCL to Rs1,351 per unit, showing an increase of Rs417 per unit.

The Ogra decision would provide about Rs121 billion additional funds to SNGPL during the upcoming fiscal year and Rs105bn additional funds to SSGCL. The regulator said both determinations had been sent to the federal government for receipt of category-wise natural gas sale price advice as required under Section 8(3) of the Ogra law.

The regulator said the SNGPL had demanded 286pc increase in its average prescribed price or an increase of Rs2,206 per unit on the basis of pervious year’s amounts approved by it but not recovered from consumers under the government decision but it allowed only 50pc increase or Rs415 per unit increase.

Ogra comes up with suggestion to fill revenue gap of SNGPL, SSGCL

Likewise, it said the SSGCL had demanded 42pc increase or R388 per unit to Rs1,322 per unit, but the regulator worked out its tariff increase by 45pc or Rs417 per unit to Rs1,351 per unit.

Ogra noted that total operating income of SSGCL was estimated at Rs240bn against its revenue requirement of Rs339bn, leaving a shortfall of Rs104.7bn in fiscal year 2023-24. It said that out of an increase of Rs417 per unit, about 97pc (Rs403 per unit) was on account of cost of natural gas.

Similarly, the net operating income of SNGPL was estimated at Rs256bn under the existing gas rates against its revenue requirement of Rs358.4bn, thus leaving a shortfall of Rs120.115bn. In order to bridge this shortfall, Ogra “hereby makes on provisional basis, upward revision of Rs415 per unit in the prescribed prices” to Rs1,239 per unit for next fiscal year.

It said the revised provisional prescribed prices determined by the regulator were subject to re-adjustment on the advice of the federal government in respect of sale price for each category under the socio-economic consideration subject to the condition that “overall increase in the average prescribed price remains unchanged” so that the companies are able to achieve their revenue requirements.

The SNGPL supplies natural gas and regasified liquefied natural gas (RLNG) to Punjab and Khyber Pakhtunkhwa while SSGCL supplies gas to Balochistan and Sindh. Both companies have claimed that major reason for the higher revenue requirement was linked to the international price of crude oil and furnace oil in line with agreements signed by the government with gas producers.

Published in Dawn, June 3rd, 2023