ISLAMABAD   -  Oil and Gas Regulatory Authority (OGRA) on Thursday allowed an increase of 5.4 percent in the prescribed gas price and 100 percent increase in meter rent for the consumers of Sui Southern Gas Company (SSGC).

OGRA in its determination on the SSGC petition for estimated revenue requirement (ERR) for financial year 2020-21, allowed hike in prescribed price of gas.

As per the decision, the regulator has allowed an increase to recover Rs14,270 million shortfall in estimated revenue requirement (ERR) for financial year 2020-21 including prior year shortfall of Rs50,983 million. The new prescribed price has been determined at Rs778.59 per mmbtu with increase of Rs39.89 per mmbtu. The authority has also allowed the gas utility to increase the gas meter rent from Rs20 per month to Rs40 per month for domestic consumers.

“If federal government fails to so advice within the said 40 days and the prescribed price for any category of retail consumers determined by the authority is higher than the most recently notified sale price for that category of retail consumers, the authority shall be obligated to notify in the official gazette the prescribed price as determined by the authority to be the sale price for the said category” OGRA said in its decision.

The regulator suggested that the petitioner should focus and make concerted efforts on reduction of UFG, improvement of internal control systems, increase of efficiency, quality of service, emergency response plan, and effective cost control, reduction measures should be taken to remain financially viable instead of making all out efforts to seek passing on of costs associated with its own inefficiencies, malpractices, thefts, bad debts and alike to the consumers.

During public hearing, Managing Director explained that the petitioner’s RERR for the said year is reflecting a surplus of Rs22,745 million. However, after inclusion of Rs50,983 million, being unadjusted shortfall for prior years up to FY 2017-18, resulted in shortfall of Rs28,242 million or Rs78.95 per MMBTU for indigenous gas business.

The petitioner briefly explained the reasons for its claims including T&D expenses and fixed assets. The petitioner requested the Authority for upfront adjustment of HR cost and other expenses for its recovery as yearend allowance results in adjustment of GDS or accumulation of revenue shortfall.

The interveners during the hearing said that it was highlighted that RERR scope is limited to the extent of actual changes in wellhead gas prices/cost of gas. It was highlighted that dollar prices of crude oil and HSFO are volatile. Therefore, petitioner’s estimates be checked by the Authority. Moreover, dollar parity has been taken by the petitioner at an exaggerated level, since in recent months appreciation in Pak Rupee parity against US$ has been observed. It was requested to allow new gas connection to the export-oriented industry in Karachi as it would increase country export and bring foreign exchange. Ban, if any, needs to be abolished.

Interveners demanded that the exorbitant costs and expenditure of the petitioner’s management must be capped or linked to actual performance improvement as the same was ultimately passed on to consumers. They further said that reduction in world oil prices must be passed on to the industry as per the defined formula otherwise it would have a devastating effect on Pakistan’s economy. It was demanded that gas companies be asked to cut their rate of return from 17.5% to 15 percent.