Tuesday April 23, 2024

OGRA auditing gas cos to find actual UFG losses

By Javed Mirza
December 12, 2020

KARACHI: Oil & Gas Regulatory Authority (OGRA) has initiated forensic technical, commercial, and management audit of the two gas companies to determine actual unaccounted for gas (UFG) losses for indigenous as well as regasified liquefied natural gas (RLNG), separately in transmission and distribution system, an official said on Friday.

Imran Ghaznavi, the spokesperson for the OGRA confirmed the audit for both supplies on monthly and yearly basis for fiscal years 2014-15 to 2019-20 along with verification of diversion of RLNG volume by Sui Northern Gas Pipelines (SNGPL) to domestic and commercial consumers from FY 2017-18 to 2019-20.

“The forensic audit would be conducted by an international firm, and a tender for hiring the services of international technical, commercial, and management auditors has been floated,” Ghaznavi added. The authority had earlier announced it would audit RLNG consumer losses, after which it noted through internal workings that it had erroneously been allowing gas companies to charge RLNG consumers about 6-7 percent higher for at least five years, resulting in significantly higher rates.

The auditors would scrutinise all components involved in diversion of the RLNG by the SNGPL and calculation of UFG of both SNGPL and Sui Southern Gas Company (SSGC) in respect of indigenous gas and RLNG starting from the gas input from the sources including wellheads as well as LNG terminals until the delivery to the end consumers and shippers.

“Auditors of the SSGC and the SNGPL and those who were engaged during last five years for carrying out similar assignment are not eligible to participate in this assignment,” an official said.

The OGRA last month reduced the UFG rate to 6.3 percent, while notifying the LNG prices for November 2020. Earlier, the authority had allowed 11-17 percent UFG recovery to the gas utilities on the distribution of LNG to the consumers.

The SNGPL’s UFG stands at 11 percent, while the UFG for SSGC is on the higher side at 18 percent. However, consumers using domestic gas bear a burden of 6.3 percent UFG. The OGRA also pointed out that since such gas consumers were being charged 6.3 percent UFG, it also applied the same rate to the RLNG consumers.

However, the SNGPL challenged the decision noting the RLNG price notification issued by OGRA was in contravention with the Petroleum Levy Ordinance 1961 and against the cabinet’s decision of allowing the actual UFG for the RLNG pricing.