OGRA reserves decision on SSGCL petition for gas price hike

KARACHI: The Oil and Gas Regulatory Authority (OGRA) on Monday reserved its decision on a petition of Sui Southern Gas Company Limited (SSGCL) seeking an increase of its average prescribed price by Rs667.44 per mmbtu for FY2022-23.

OGRA conducted a public hearing to seek comments/point of view of consumers, general public, and stakeholders on the review petition.

SSGCL projected a shortfall in revenue requirement at Rs184,881 million, including Rs33,787 million on account of un-recouped shortfall for FY2021-22, seeking an increase in its average prescribed price by Rs667.44 per mmbtu (metric million British thermal unit) for the current financial year.

The petitioner estimated RLNG cost of service at Rs26.23/mmbtu for 2022-23.

Speaking during the hearing, Chairman Businessmen Group (BMG) and former president of Karachi Chamber of Commerce and Industry (KCCI) Zubair Motiwala raised concerns on the SSGC’s petition carrying calculations about its revenue shortfall and expenditures estimated at a dollar value of Rs231.

“Finance Minister Ishaq Dar has assured time and again that he would bring down dollar to less than Rs200 that is currently hovering around Rs220. Around 15 percent difference is already there and more is likely,” he said.

Motiwala emphasised that the SSGC should trust the finance minister’s words and accordingly come up with estimates for its expenditures.

He also questioned SSGC’s plans to lay pipelines amid ongoing gas crisis in the country. “Instead of laying new pipelines, SSGC should replace old and rusted pipelines to save gas from leakages and bring down the exorbitant unaccounted for gas (UFG) losses.”

Articulating concerns over 19 percent UFG losses, he said the losses include losses incurred in Baluchistan, Sindh, and Karachi industries, commercial, and domestic users, complaining that the entire burden of the UFG losses was shifted on the industries, which contributed only 5 percent in the losses.

Motiwala appealed OGRA chairman to seek details of the precise losses being faced by the company in supplying gas to industries and domestic consumers.

“No gas is supplied to domestic users in Dubai, Abu Dhabi, Qatar, Mumbai where gas is provided either via bousers or cylinders, which is the only way to bring down the exorbitant UFG to a very low level.”

He was of the view that the UFG could be brought down to 5 to 6 percent by adopting the similar practice, and segregating the domestic users from industrial consumers.

BMG chief further pointed out the SSGC ‘s mentioned impact 25.47 inflation was of food inflation, not the core inflation that stood at 11.3 percent.

“SSGC has also filed previous years’ losses, which have already been denied by OGRA. If the same issue has once again been brought, it means that SSGC is challenging OGRA’s denial,” he opined.

He further argued in the public hearing that SSGC gets 110mmcf gas from Sui that is enhanced to 200 mmcf during the winter season.

“SNGPL takes away 280 mmcf gas from Sui but does not contribute a single molecule of gas to deal with the increased demand for gas inBaluchistan during the winter season.”

He added that the entire burden was shifted on SSGC, which needed to be rationalised by distributing in proportion to the amount of gas being taken by SSGC and SNGPL from Sui.

The former KCCI president lamented that the country’s exports were declining due to unavailability of gas to the industries.

“How could the government expect from exporters to deliver and compete with Bangladesh and India when they have no gas,” he questioned, adding that the export sector was capable of enhancing the exports by 50 percent or $15 trillion within the installed capacity with availability of gas at a competitive price.

He was of the opinion an ill-planned gas priority chart was the main had contributed to the economic issues being faced by the country.

The chart had given first priority to the domestic users instead of the industries, he claimed. “To provide gas to 29 percent of the country’s population as the rest of 71 percent to date use other conventional sources for overcoming domestic heating needs, gas to the industries is denied who bear the highest cost of gas.”

Motiwala said the country was going through worst financial crisis as the exports were going down, home remittances have also descended by 9 percent, inflation was high, and reserves were limited for imports.

He stated that around 7,000 applications were still pending approvals by the central bank for imports of essential items, including machinery parts, raw materials and solar equipment, etc. “It has led to terribly affecting the production activities of industries,” he said. OGRA heard the comments of all stakeholders and reserved its decision to be issued within due course of time.