Hike in Gas tariffs for SNGPL,SSGC consumers

Gas tariffs will need to be increased by Rs.98 per MMBtu for SNGPL customers and Rs.109.91 per MMBtu for SSGC customers to comply with the IMF’s ninth review prior condition of no increase in gas sector circular debt for the final four months of the current fiscal year,

According to knowledgeable sources, the Oil and Gas Regulatory Authority (Ogra) must immediately boost rates that would stop the expected addition of Rs.70 billion to the existing Rs.670 billion circular debt of the two gas companies in order to stop any further addition to the circular debt.

Ishaq Dar, the finance minister, stated at a press conference on Friday that the government has promised to halt any further increases in circular debt. He also stated that although the Petroleum Division has the actual numbers, approximately Rs.170 to Rs.270 billion are added to the circular debt for gas each year.

Government considering raising gas tariffs

According to a petroleum division official who spoke on the record on the condition of anonymity, the circular debt will reach Rs.740 billion by the end of June 2023 if the 11.5 percent price increase for SNGPL and the 11 percent tariff for SSGC are not imposed.

Before finalizing their audited yearly accounts, gas businesses frequently falsify their loss statistics, according to former Member Gas, Ogra, Mohmmad Arif.

Currently, the Sui Southern Gas Company system’s residential gas tariff is Rs.450 per MMBtu compared to the prescribed price of Rs.850 per MMBtu, and the Sui Northern Gas Pipeline Limited system’s residential gas tariff is Rs.400 compared to the prescribed price of Rs.1,007 per MMBtu. This large discrepancy between the sale price and the actual cost of gas is evident.

The government is considering introducing the WACOG tariff to recover the RLNG cost and the matter is pending with the Council of Common Interests (CCI).

RLNG prices are currently ring-fenced and categorized as a gas product. Previously, RLNG was considered as a petroleum product, therefore its cost could not be recovered from residential gas consumers. RLNG worth Rs.108 billion has been injected into the system during the last four winters, with an additional Rs.110 billion RLNG to be delivered in the current winter season, for a total of Rs.218 billion diverted to the domestic sector in Punjab till February 2023.

Ogra reaffirmed in its recommendations dated January 9, 2023, that all classes of customers should pay at least the average cost of service or the average prescribed price, except where federal government policy guidelines have been supplied, which must be followed.