Seeking to overcharge consumers: gas utilities putting undue pressure on Ogra through MoP

The public gas utilities, Sui-Southern Gas Company Limited (SSGCL) and Sui-Northern Gas Pipelines Limited (SNGPL), are pressurising the Oil and Gas Regulatory Authority (Ogra) through Petroleum Ministry to allow them to overcharge gas consumers by Rs 10 billion on account of Unaccounted for Gas (UfG) in the next fiscal year 2012-13, it is learnt.
Both the gas utilities have overcharged the gas consumers by Rs 38 billion in last two years, official documents available with Business Recorder revealed. Sources in Petroleum Ministry told this scribe that the authority had proposed the government UfG losses for both the gas utilities should not be over 5.46 percent, while the Petroleum Ministry and gas utilities are pressing Ogra to allow 7.58 percent UfG losses. Managing Director SNGPL Arif Hameed has requested the Petroleum Ministry for allowing 9 percent UFG losses in the premises of SNGPL.
In a letter written to the Petroleum Ministry and Secretary Planning division the Ogra has quoted example of Bangladeshi gas company (Titas Gas), which had brought down UfG losses from 7.06 percent to 0.81 percent within four years (from 2004-05 to 2008-09) and have suggested the government to adopt similar measure in bringing down UfG losses. According to officials gas theft in the country has reached at 400 Million Cubic Feet per Day (MMCFD), which is sufficient to generate 2,000 megawatts of electricity that would reduce power load shedding to four hour daily.
"An extra burden to the tune of Rs 38 billion had been passed on to the consumers in financial year 2010-11 and 2011-12 as a consequence, Federal Government announced price increase of 13.55 percent with effect from August 07, 2011. In January 2012, Ministry of Petroleum and Natural Resources (MP&NR) has increased sale price for various categories of consumers in the range of 13.98 percent to 20.7 percent. The whopping increase has added to the miseries of general public and created hue and cry countrywide. Furthermore, in case of SNGPL, Rs 12 billion of gas development surcharge has been eroded in 2011-12 alone," said a letter written by Ogra to the Petroleum Ministry.
The letter stated, "It is submitted that Deputy Attorney General for Pakistan and the then Secretary Ministry of Petroleum had not supported Ogra's stance in Lahore High Court for treating Late Payment Surcharge, Meter Manufact4ring Plants, Sale of gas condensate and Royalty from Jamshoro Joint Venture Limited (JJVL) as operating income and fixing UFG targets per Ogra's prescribed benchmark of 2.5 percent in the revenue requirement for FY 2010-11."
According to sources in petroleum ministry then Secretary Petroleum Imtiaz Qazi requested the LHC to declare line losses, meter manufacturing plants, late payment surcharge as non-operating costs which would have no impacts on consumer gas prices. As per international business practices the authority considers abovementioned costs of gas utilities as operation costs. The authority has requested the government to revisit its stance in the larger public interest and take necessary actions to vacate the High Court's stay order granted against Ogra's above referred decisions.