Ogra to cut natural gas prices by 6pc

ISLAMABAD: Owing to decline in the oil prices in the international market, the Oil and Gas Regulatory Authority (Ogra) has suggested the government to reduce the natural gas prices by up to 6 percent for consumers.

The suggestion has been made after holding a public hearing with the SNGPL and SSGCL and statistical analysis of their data. The regulator Tuesday issued its decisions regarding the state-run gas distribution companies which had approached it to sanction them up to 101 per cent increase in prescribed gas prices with effect from July 1, 2020 to meet revenue requirements, but after holding public hearings, the authority rejected their demand and reduced the prescribed gas price of SNGPL by Rs40.94/mmbtu (or 6.1 per cent) and SSGCL by Rs18.30/mmbtu (or 2 pc).

The Ogra has sent its decision to the federal government for notifying the new prices. The SNGPL had sought average increase in prescribed prices of gas to Punjab, Khyber Pakhtunkhwa and Azad Jammu and Kashmir of Rs622.94/mmbtu to Rs1,287.19/mmbtu for financial years 2020/21.

The SSGCL that is feeding Sindh and Balochistan has sought an increase of Rs85.35/mmbtu to Rs881.53/mmbtu from current average prescribed price of Rs796.18/mmbtu. The regulator has suggested slashing prescribed price for SNGPL by Rs40.94/mmbtu to Rs623.31/mmbtu. For SSGCL, it suggested cut of Rs18.30/mmbtu to Rs750.90/mmbtu.

The Ogra, under Section 8(1) of OGRA Ordinance, 2002, vide its decision dated July 13, 2020 & July 14, 2020, has determined the revenue requirement of Sui Northern Gas Pipelines Company Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) for FY 2020-21 respectively and has sent the same to the federal government for gas sale price advice in respect of each category of consumers under Section 8(3) of said Ordinance.

The Ogra has significantly slashed the gas companies’ demand for increase in gas prices for FY 2020-21. The main reason for reduction in price is international oil prices along with other disallowances made by the Ogra in respect of revenue and capital expenditures.