50pc hike in gas tariff on cards from Jan 1

ISLAMABAD:  A massive 50 percent increase in the gas tariff is on the cards from January 1, 2016. For the last financial year, the Oil and Gas Regulatory Authority (Ogra) has once again permitted gas companies to charge legitimate consumers  the 1 percent loss being incurred because of bad law and order and 1.5 percent on account of non-gas consumers.

This means for the financial year 2014-15, the unaccounted for gas (UFG) has been increased to 7 percent which will reflect in the gas bills for January 1, 2016 that is just 17 days away.

Ogra has already decided to pass on the Rs25 billion burden of inefficiency of gas companies to legitimate end gas consumers by increasing the UFG volume in the gas tariff by 2.5 percent to 7 percent from the existing 4.5 percent in its determinations about the final revenue requirements of gas utilities (Sui Southern and Sui Northern) for the financial years 2012-13 and 2013-14.

If the impact of losses because of inefficiency of the last three financial years — 2012-13, 2013-14 and 2014-14 — is calculated, it comes to Rs37.50 billion which will be passed on to end consumers and this is how the gas tariff will increase by almost 50 percent from January 1.

However, Ogra’s top man says losses for the financial years 2012-13 and 2013-14 had been worked out under the head of law and order and non-gas consumers at just above Rs18 billion and this amount will not be passed on to consumers as the said amount will be adjusted in the gas development surcharges (GDS) the provinces were getting from the centre.

Ogra says the gas companies have been permitted to recover the losses from consumers under the provisions, allowances and disallowances, arguing that the UFG was still at 4.5 percent. To this effect, Ogra finalized determinations on November 5-6, 2015.