Ogra recommends hefty hike in gas prices.


Byline: Fawad Yousafzai

Islamabad -- The Oil and Gas Regulatory Authority (Ogra) has recommended an increase of up to 214 per cent in gas prices for domestic consumers.

The decision which will take effect from January 2020 will help both Karachi-based Sui Southern Gas Company Limited (SSGC) and Lahore-based Sui Northern Gas Pipeline Limited (SNGPL) to collect around Rs38 billion from gas consumers during next six months (January 1st to June 30).

The regulator has sent its decision to the federal govt, seeking advice to pass on increase in prices of gas to the consumers. The federal government has to respond to Ogra's decision in 40 days and notify revision in gas prices for different consumers.

If notified, the said hike is likely to impact the entire economy including households and industries, severely. Resultantly, people may even witness hike in the headline inflation.

Proposes up to 214pc increase for domestic consumers

Ogra had determined the estimated revenue requirement of SNGPL for 2019-20 in May 2019 at Rs293.305 billion and shortfall at Rs89.177 billion translating into an increase of Rs236.81 per mmbtu in the average prescribed price. The SNGPL had submitted a review petition on October 15, 2019 projecting a shortfall of Rs42,296 million translating into an average increase of Rs115.54 per mmbtu in its prescribed prices. However the authority allowed an increase of Rs81.98 or 13.11 percent to SNGPL. The increase will enable the company to generate Rs30 billion extra revenue. Similarly, in its review petition, the SSGC had claimed average increase in prescribed price of Rs62.52 per mmbtu or Rs22.673 billion revenue requirement. However Ogra has allowed an increase of Rs7.812 billion or Rs24 per mmbtu.

As per Ogra's decision, prescribed price for SNGPL have increased by13.11 percent while for SSGC it has gone up by 3.23 percent. The prescribed price for SNGPL has been increased from 626.93 per mmbtu to Rs706.91 per mmbtu while the average prescribed price for SSGC has been increased from existing Rs735.48 per mmbtu to Rs759.24 per mmbtu.

First two domestic slabs are currently highly subsidised as compared to actual cost of service of indigenous natural gas or the cost of RLNG which is diverted in winter, and the cost of alternative fuel i.e. LPG. Therefore, the same has been decided to be rationalised keeping in view the actual cost of service. Accordingly in respect of existing first slabs (upto 1HM3), the prescribed price has...

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