SNGPL proposes abnormal hike in security deposit of domestic consumers

ISLAMABAD-The security deposit for domestic gas consumers using natural gas/RLNG is likely to reach to up to Rs50000 as Sui Northern Gas Company Limited (SNGPL) has proposed an abnormal hike in the security deposit of its consumers.
As per the petition submitted with the Oil and Gas Regulatory Authority, SNGPL has sought increase in security deposit for the domestic consumers using RLNG above 1.67 HM3 per month to Rs 50000 from the existing Rs15000, while for the consumers using natural gas will increase from the existing Rs 4500 to equivalent of three months winter months bills (Dec, Jan, Feb). However, for the domestic consumers using gas of up to 1.67 HM3 per month the security deposit will remain Rs 4500.
While presenting its case, SNGPL said that that purpose of security is to safeguard the company against possible defaults on part of the consumers. It is very effective tool to safeguard the financial interest of the company hence adequate security is always maintained by the company in the light of the authority’s approval granted from time to time. It is highlighted that the Authority vide decision July, 03, 2013 fixed the security deposit for new domestic consumers i.e. Rs.4,500/-subject to revision once the consumption pattern of the consumer is established. This implies that after establishment of consumption pattern, the security deposit may either be increased or decreased based on annual average consumption of three months. Due to non-fixation of minimum benchmark, the company would be in a continuous process of either recovering or adjusting the security amount. 
Absence of minimum benchmark would be a perplexing situation for the consumers as well and incase of change of ownership/tenancy, the benefit/adjustment would not reach the actual consumer. There is a huge disparity of household gas consumption between winter and summer seasons. Due to progressive slabs imposed on higher consumption, the gas bill of a particular system gas consumer may even cross Rs50,000 in a winter month, while security deposit of Rs4,500 may not serve an effective safeguard in such cases. Therefore, it is requested that instead of taking average of 12 months, only winter months’ average may be taken.
According the mechanism/benchmarks submitted by SNGPL for Domestic System Gas and RLNG consumers for the approval of Ogra, it has been proposed that minimum security deposit for new domestic consumers (system gas) should be Rs. 4,500/. This amount has been calculated on the basis of winter months average consumption of HM31.67 per month for three months period. For existing consumers whose security is maintained below the level of this threshold, the shortfall will be recovered over a period of six months in equal installments (to be billed and recovered in summer months).
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 average consumption of last year’s winter season i.e. (Dec, Jan, Feb). Once the security of the consumer is maintained on the basis of winter months’ billed amount, this will serve as 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.
For the security deposit of the domestic consumers on RLNG, the company said that the security deposit was fixed at Rs.15,000/-for RLNG domestic consumers.Since then, there has been exorbitant increase in RLNG price and $ exchange rate. It is therefore, necessary to increase the basic threshold of the security deposit for RLNG domestic consumes. It is pertinent to mention here that in case of system gas domestic connection, security deposit is maintained according to 03 months estimated gas consumption whereas for RLNG domestic consumers security deposit is maintained at two months. This facility has been extended with a view to develop market for RLNG while the tariff is already very high.
Minimum security deposit for new domestic consumers (RLNG) shall be Rs. 50,000/-. This amount has been calculated by applying the latest RLNG tariff on benchmark consumption of 1.67HM3 and then applying applicable taxes and multiplying the resultant number with two months. Since RLNG price and $ exchange rate is subject to rapid changes, this minimum benchmark shall be subject to revision after every twelve (12) months for new consumers if there is change in tariff. However, the average consumption benchmark i.e.1.67HM3per month will remain intact.
For existing RLNG domestic consumers whose security is maintained below the recommended level of minimum threshold i.e. Rs. 50,000/- the shortfall will be recovered over a period of six months in equal installments (to be billed and recovered in summer months) subject to annual revision. In case the tariff/$ dollar exchange rate is reduced (to be calculated annually) then the security will be adjusted according to revised tariff (by credit adjustments in subsequent six months). For maintaining minimum threshold, a consumption benchmark i.e. 1.67 HM3 per month will remain intact.
It is submitted that security deposit is the only effective and practical tool to safeguard against the possible default. The outstanding dues of defaulters are covered against held security and if not covered, the company has to undertake long and complicated legal proceedings against the defaulters. Most of the times, due to various complications the recovery from defaulters is not materialized. Absence of lien of SNGPL on assets, sale of property multiple times, ageing of the connections, etc. add to the complexities. Ogra will be holding hearing on SNGPL petition on 11 December and has invited comments from the stakeholders regarding the increase in the average prescribed gas prices. 
Interestingly, unlike National Power Regulatory Authority(NEPRA) which holds public hearings in its headquarters and allow stakeholders zoom access, Ogra will be holding a public hearing on the SNGPL petition in an expensive hotel and as usual there no zoom access will be available for the gas consumers, media or experts. Holding public hearing in expensive hotels is not only expensive but also limits the stakeholders participation in the process.

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