By Naveed Siddiqui
ISLAMABAD: To meet the mid-February deadline set by the International Monetary Fund (IMF), the Oil and Gas Regulatory Authority (Ogra) has conceded significant terms to the gas utilities — Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGC). This decision will result in an additional burden of Rs100 billion on consumers over the next four months through tariff hikes ranging from 9 to 35 percent.
In compliance with the government’s commitment to the IMF, Ogra has expedited the process by abbreviating public hearings to only one session each in Lahore and Karachi. Notably, consumers in the northern regions and Balochistan were excluded from representation during this decision-making process.
The regulatory authority has permitted substantial losses in unaccounted-for gas (UFG) on both transmission and distribution fronts, surpassing previous limits by allowing 7.78 percent and about 10 percent respectively. Furthermore, Ogra has sanctioned increases in human resource and sports-related expenses for the utilities, transferring these financial burdens to consumers rather than shareholders.
Despite previous allocations for controlling unaccounted-for gas, Ogra has approved additional funds for this purpose. Additionally, significant expenses such as security costs, LNG cost of service, and litigation charges resulting from international arbitration losses have been passed on to consumers.
Contrary to past practices, Ogra’s decision-making process remained opaque this time, with no public statements issued on tariff determinations. The approved tariff adjustments include a 35.13 percent increase for SNGPL and an 8.57 percent increase for SSGC for the current fiscal year. These adjustments aim to bridge the Rs98 billion shortfall faced by both gas companies.
The recommended average increase in prescribed gas prices amounts to 23 percent, raising the average price to Rs1,590 per million British thermal units (mmBtu). Notably, the prescribed prices for SNGPL and SSGC have been substantially raised, with SNGPL’s price increasing to Rs1,673.82 per mmBtu and SSGC’s to Rs1,466.40 per mmBtu.
The decision by Ogra to grant concessions to gas utilities and impose hefty tariff increases on consumers comes as the government endeavors to meet IMF targets. However, the move has raised concerns regarding transparency and the distribution of financial burdens among stakeholders.
