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SNGPL seeks significant security deposit increase for gas consumers

The suggested hike could raise the security deposit for RLNG consumers to Rs50,000, up from the current Rs15,000 for those using over 1.67 cubic meters of gas per month

December 08, 2023

ISLAMABAD: The Sui Northern Gas Company Limited (SNGPL) has requested a significant security deposit increase for domestic gas consumers in a proposal submitted to the Oil and Gas Regulatory Authority (Ogra).

The suggested hike could raise the security deposit for RLNG consumers to Rs50,000, up from the current Rs15,000 for those using over 1.67 cubic meters of gas per month. For natural gas consumers, the proposal aims to increase the deposit from Rs4,500 to the equivalent of three winter months’ bills (Dec, Jan and Feb).

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

SNGPL justifies the proposal, emphasizing the deposit’s role in safeguarding against consumer defaults. The company argues that a sufficient deposit is crucial for protecting its financial interests, as approved by the regulatory authority.

To address challenges, SNGPL proposes a revised approach, suggesting the use of the average winter months to determine deposit adjustments rather than a 12-month average. This, they argue, aligns better with the seasonal variation in gas consumption.

For those existing consumers whose consumption in winter is registered higher and the minimum threshold i.e Rs. 4,500/-, the security will be recovered equivalent to 90 days consumption based on the average consumption of last year’s winter season i.e. (Dec, Jan, Feb).

Once the security of the consumer is maintained based on the winter months’ billed amount, this will serve as a minimum benchmark of that particular consumer i.e. the security will not be reduced below that level even if in subsequent winter(s), lower consumption is registered or tariff is reduced.

The company sought an increase in the security deposit for RLNG domestic consumers, citing a significant rise in RLNG prices and the USD exchange rate since the initial deposit of Rs15,000. The revised security deposit aims to align with the current market conditions. Notably, this adjustment brings the security deposit for RLNG domestic consumers in line with that of system gas domestic connections, which is based on three months’ estimated gas consumption, while RLNG deposits will now be equivalent to two months’ consumption. This change is implemented to support the RLNG market, despite existing high tariffs.

The minimum security deposit for new RLNG domestic consumers is Rs50,000, calculated based on the current RLNG tariff, applicable taxes, and a two-month consumption of the benchmark 1.67 HM3. This minimum benchmark may be revised annually due to tariff changes, while the average consumption benchmark remains constant at 1.67 HM3 per month.

For existing RLNG domestic consumers below the Rs50,000 minimum security threshold, the shortfall will be recovered in six equal installments billed during summer months, subject to annual revision. If there’s a tariff or USD exchange rate reduction (calculated annually), the security deposit will be adjusted through credit adjustments over the subsequent six months. The 1.67 HM3 per month consumption benchmark remains unchanged for maintaining the minimum threshold.

The proposal will undergo a hearing by the Oil and Gas Regulatory Authority on December 11, with stakeholders invited to provide comments on the proposed increase.