Ogra proposes up to 26pc hike in gas prices

ISLAMABAD: The Oil & Gas Regulatory Authority (Ogra) has asked the federal government to increase gas rates by up to 26pc to generate about Rs847.33bn during the current fiscal year.

In its two separate determinations forwarded to the federal government on Tuesday, the regulator said it worked out an increase of Rs142.45 per million British thermal units or MMBTU in the average price for Sui Northern Gas Pipelines Limited (SNGPL) consumers in Punjab, Khyber Pakhtunkhwa and other northern areas.

The proposed hike for Sui Southern Gas Company Limited (SSGCL) consumers in Sindh and Balochistan was Rs361 per unit.

The regulator advised that each SNGPL consumer be charged a flat rate of Rs1,778.35 per unit (instead of Rs1,635.90 per unit) and that of SSGCL Rs1,762.51 per unit (from Rs1,401.25 per unit at present) from February 1.

The price hike has been proposed to recover the full cost of gas from all consumers to address circular debt.

The increase in prescribed price for SNGPL consumers has been worked out at 8.71pc and 25.78pc for SSGCL consumers.

Under the amended Ogra law, the federal government has to advise category-wise consumer rates but without changing the overall revenue requirement worked out by Ogra.

The changes in consumer rates could only be made through cross-subsidy by various consumer categories or through subsidy out of the taxpayers’ money through the federal budget.

The regulator reminded that the average flat rate of Rs1,778.35 per unit would be notified for SNGPL and Rs1,762.51 per unit for SSGCL in case it failed to provide subsidy and cross-subsidy adjusted consumer rates for various categories as required under the law amended on IMF’s instructions.

The government has also signed a structural benchmark to notify fresh gas prices with effect from February 1, 2025 on Ogra’s determination.

The regulator cited high system losses but allowed about 7.37pc of unaccounted losses for SNGPL to be charged from consumers under the new prices.

It also worked out 12.45pc Unaccounted for Gas (UFG) losses for SSGCL.

The regulator said the SNGPL had demanded 10.67pc increase in average prescribed prices but was allowed 8.71pc while SSGCL had demanded 208.67pc increase in revenue requirement but was allowed only 25.78pc.

The SSGCL had requested to hike the price from the existing Rs1,410.25 per MMBTU to Rs4,325.24 per MMBTU.

However, the regulator has determined a hike of Rs361.26 per MMBTU to Rs 1,762.51 per MMBTU.

In its petition, the SSGCL has projected a revenue requirement of Rs401.655 billion for FY 2024-25. However, Ogra determined it at Rs319.481bn.

Similarly, the company had sought Rs502.981bn as an adjustment for the previous year’s revenue shortfall. However, the regulator allowed Rs48.853bn.

SNGPL had requested to hike the price from Rs1,810.38 per MMBTU. However, the regulator has determined a hike of Rs142.45 per MMBTU to Rs1,778.35 per MMBTU.

In its petition, the SNGPL had projected a revenue requirement of Rs580.744bn for FY 2024-25. However, OGRA determined it at Rs527.548 billion.

Strangely, the SNGPL had not sought any adjustment for the previous year’s revenue shortfall, but the regulator allowed it Rs50.803bn.

Through these determinations, the federal government has been asked for advice on category-wise sale prices, said Ogra.

Any revision, as advised by the federal government, shall be accordingly notified by Ogra. “Till such time, the existing category-wise natural gas sale prices shall continue to prevail”, it said in a statement.

Published in Dawn, December 18th, 2024