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Friday November 08, 2024

Massive gas price hike sought for households

Sui Northern has asked for the prescribed tariff of Rs1711.73 per MMBTU for each category of consumers

By Khalid Mustafa
October 29, 2024
Flames come out of a domestic gas ring of an oven burner. — Reuters/File
Flames come out of a domestic gas ring of an oven burner. — Reuters/File

ISLAMABAD: The domestic gas consumers will pay Rs163.058 billion in the ongoing financial year on account of RLNG diversion cost as Sui Northern Gas Pipeline Limited (SNGPL) has sought from the Oil and Gas Regulatory Authority (Ogra) a further increase in the prescribed price of gas by Rs64.16 per MMBTU for 2024-25.

In the petition submitted on October 15, 2024, with the regulator, Sui Northern has also projected the shortfall in the revenue requirement for FY2004-25 at Rs20.582 billion including Rs 489 million on account of the LPG Air Mix project seeking an increase in its average prescribed price by Rs64,16 per MMBTU for current fiscal. Sui Northern has asked for the prescribed tariff of Rs1711.73 per MMBTU for each category of consumers from July 1, 2024, with RLNG supply cost at Rs279.87 per MMBTU.

It mentions the cost of RLNG diverted volumes to domestic gas consumers, as part of the cost of imported gas in the light of the ECC decision ratified by the federal government on October 30, 2023. The cost of the gas is linked to the international price of HSFO and crude oil or Brent in line with the agreements between Pakistan, Qatar and ENI. The petitioner has claimed the RLNG cost of service at Rs304.27 per MMBTU for FY2024-25. The Ogra will hold a public hearing on November 5, 2024 on this petition in SNGPL Headquarters, Lahore.

The instant petition for Review of Estimated Revenue Requirement (RERR) for FY 2024-25 is primarily based on the cost of gas for which its actual data for July 2024 and August 2024 has been taken. In addition, actual well-head prices notified by Ogra for July 2024 to December 2024 have been taken. For the remaining months, well-head gas prices have been calculated on the exchange rate of Rs254.34 against one US dollar, crude oil price at $80.53 per barrel and price of HSFO per metric ton at $437.1064 from January 2025 to June 2025. From July 2024 to December 2024 they have been calculated on the exchange rate of Rs278.95 as against one US dollar, crude oil price at $83.67 per barrel and HSFO at $454.15 per ton. The company has projected RLNG equivalent to 49180 BBTU (billion thermal units) to be diverted and sold to system gas consumers at the system gas price during FT2024-25. The total cost of diverted RLNG has been projected at the level of Rs163.058 billion. This cost has been included in the revenue requirement of the domestic gas consumers. RLNG input has been projected at an average of 10 cargos based on the current annual delivery programme. Due to the reduction in RLNG demand, mainly less offtake by the power sector, the company has no other option but to shut down the local well-heads to safeguard the pipeline infrastructure.