Thursday February 29, 2024

SNGPL seeks another 137% hike in gas tariff

December 06, 2023

ISLAMABAD: In order to meet the projected revenue shortfall, Sui Northern Gas Pipeline Limited (SNGPL) has yet again sought over 137 percent increase amounting to Rs1,715.49 per MMBTu in average prescribed gas prices from the Oil and Gas Regulatory Authority (Ogra) for the fiscal year 2023-24.

In its petition filed before the regulatory authority, SNGPL, which is feeding gas to Punjab and Khyber Pakhtunkhwa, requested to revise the rate to Rs2,961.98/MMBTu, from the existing Rs1,246.49/MMBTu, right from July 1 of the current financial year.

This photo shows the flames of a lit burner of a gas stove. — AFP/File
This photo shows the flames of a lit burner of a gas stove. — AFP/File

The company’s petition to Ogra outlines an estimated revenue requirement for FY24 at Rs179.16 billion, including Rs697 million allocated for LPG air-mix projects in Gilgit for the ongoing fiscal year. On this basis, SNGPL is seeking a hike in the average prescribed gas price by Rs506.35/MMBTu, effective from July 1, 2023. It has notably incorporated the cost of re-gasified liquefied natural gas (RLNG) diverted to domestic consumers into the overall cost of gas, in alignment with a decision by the federal cabinet on October 10, 2023.

Additionally, the utility has factored in Rs427.83 billion to offset shortfalls from previous years. To justify a 137.6 percent increase in average prescribed prices to Rs2,961.98/MMBTu from July 1, 2023, SNGPL cites the rise in the cost of gas/RLNG and other components outlined in its petition.

Furthermore, SNGPL has calculated the cost of RLNG’s service at Rs72.16 billion (equivalent to Rs293.07/MMBTu) for the current fiscal year. The company indicates that the subject petition is undergoing revisions based on actual cost data and sales figures for July and August 2023, resulting in a reduction of indigenous gas business shortfall from Rs181.516 billion to Rs179.160 billion.

The revised segment-wise shortfall and RLNG business cost for FY2023-24 are detailed as Rs179.160 billion for indigenous gas business and Rs427.830 billion for shortfalls from previous years. The total indigenous gas business shortfall, inclusive of previous years’ shortfalls, amounts to Rs606.990 billion, with an additional Rs72.160 billion designated as the RLNG cost of supply, as stated in the petition.

Ogra has invited comments from all interested and affected parties, including gas consumers and the general public. A public hearing on the petition is scheduled for December 11, 2023, in Lahore, where the regulatory authority will determine the gas prices.