Ogra rejects SSGCL demand for raise in gas prices

While finalising revenue requirements of Sui Southern Gas Company Limited (SSGCL) for 2003-04, Oil and Gas Regulatory Authority (OGRA) has rejected its demand of Rs 2.4 per unit increase in gas prices. In its decision in response to a petition filed by the company in this regard, the Authority allowed only 6 paisa per unit increase in the gas prices.
The increase will not be passed on to consumers as it relates to the previous financial year, official sources told APP here on Saturday.
In the petition, the company claimed a shortfall of Rs 634 million against an estimated revenue requirement of Rs 45,091 million after incorporating the effect of actual changes in wellhead prices, operating expenses, sales volume, sales revenue and asset base.
After detailed scrutiny of the petition, the Authority worked out Rs 17 million shortfall in the revenue requirement as against Rs 634 million claimed by the company.
In its short order by the Authority, the company was asked to bring down its line losses up to 6.5 percent but only able to reduce it up to 7.09 percent.
Hence, the Authority has not allowed the reduction of Rs 227 million on this account. For the next financial year, the target has been set at 6 percent.
The company spent Rs 103 million on purchase and replacements of vehicles out of which 50 percent has been allowed, while the rest would be adjusted in the next financial year.
As many as Rs 123 million were saved by the company, while getting discount from gas suppliers. The Authority directed the company to pass on this amount to the consumers.
An expenditure of Rs 3 million and 15 million on account of excessive recruitment in executive cadre and excessive overtime respectively was not allowed.
The shortfall of Rs 12 million on account of loss of gas due to blasts on transmission pipelines in Balochistan was not allowed. The Authority asked the company to meet this shortfall from the insurance companies and not from the consumers.
The expenditure of Rs 5 million was disallowed on account of corporate social responsibility projects. The Authority also disallowed Rs 14 million spent on sports activities, as it was not classifiable as operating expenses.
Hence, the total revenue requirement for Financial Year 2003-04 was determined at Rs 46,364 million as against Rs 46,857 million claimed by the company thereby reducing the revenue required by Rs 493 million.
According to the sources, the total average cost of the natural gas is Rs 159 per BTU, while 46 percent of the total cost is charged from the domestic gas consumers using first slab. The remaining 52 percent come from the government as subsidy.