ISLAMABAD: Following an order of the Sindh High Court, the Oil and Gas Regulatory Authority (Ogra) has determined a Rs22 per unit increase in gas prices to be passed on to consumers soon after Eidul Fitr. The measure will generate an additional revenue of Rs18 billion.
An Ogra official said the fresh determination had been forwarded to the federal government for notification. Of the Rs18bn, Rs10bn will go to the government, Rs4.4bn to the Sui Southern Gas Company (SSGC) and Rs3.6bn to its private shareholders.
On June 1, Ogra had determined an average gas price of Rs413 per million British thermal units, resulting in Rs12.12 per unit reduction in the prescribed price.
The authority had worked out an increase of Rs8.27 per unit in the prescribed price for the Sui Northern Gas Pipelines (SNGPL).
Under the practice in vogue, the government has to notify a consumer-end sale price based on the prescribed rates for the two gas companies, whichever is higher. Since the SNGPL’s sale rate was to go up by Rs8.27 to Rs418, this was to become the consumer price.
According to an Ogra official, Mirza Mahmood Ahmad, a director on the board of the SSGC on behalf of the AKD Securities, one of the leading private shareholders, filed a petition in the SHC against the June 1 determination that had allowed 4.5 per cent system losses in the tariff calculation.
The SHC issued a stay order and allowed continuation of 7pc losses in tariff calculation because of another stay order issued three years ago.
It also ordered continuation of treatment of operating income as non-operating for the SSGC.
Ogra had reduced system losses to 4.5pc following the vacation of a similar stay order from the Lahore High Court.
Interestingly, former Ogra chairman Tauqir Sadiq is facing a case before the Supreme Court for allowing 7pc system losses in tariff calculation three years ago from 4.5pc.
An official said that on the order of the SHC, Ogra had to work out a revised SSGC prescribed price on the basis of 7pc system losses and excluding its operating income as non-operating income. As a result, the average prescribed price for the SSGC rose to Rs434 per million BTU, necessitating an increase of Rs21.58 per unit.
The official said the Rs79 million on account of sale of condensate, Rs3.7bn royalty from the Jamshoro Joint Venture (JJVL), Rs1.6bn late payment surcharge, Rs3.6bn additional ‘unaccounted-for gas’ and Rs1.14bn Workers Welfare Fund had been excluded from the tariff calculation and would be shared by shareholders instead being treated as revenue income for sharing with consumers.
He said Mirza Mahmood had also filed a similar petition in the LHC that, if approved, would further jack up the tariff by Rs10-12 per unit.
According to sources, the ministry of petroleum and natural resources had also given tacit approval to the petitions to improve the financial standing of the gas companies.
The firms are facing cash flow shortfalls because of heavy losses and gas theft.
A decision of the federal cabinet to conduct an independent study on determination of prudent system losses and their sharing among consumers and the shareholders has not taken off.