The reduction in gas prices, notified by Oil and Gas Regulatory Authority (OGRA) effective from July 1, 2009, for industrial consumers is inadequate in terms of just and fair tariff computation on the basis of existing variables, said Chairman Site Association of Industry (SAI).
SAI Chief Engr. M A Jabbar, in a statement issued here on Monday, pointed out that gas prices increased by 31 percent when the oil prices touched the highest level of dollars 147 per barrel. Subsequently the Federal Government also further notified an addition of 7 percent increase in gas price.
He said when oil prices have come down to dollars 60 per barrel, the present reduction made in gas prices is inadequate, insufficient and not commensurate with the existing parameters. He was of the view that when Ogra gave decision on May 15, 2009 it took into consideration the Expected Revenue Receipts (ERR) of the gas company. The notified prices are higher than prices prescribed by Ogra. These higher prices notified are not based on computation of the required revenue of SSGCL, which should be linked to the prices prescribed by Ogra.
The average notified rates are higher by Rs 31 than the average prescribed prices. The average prescribed prices for SSGCL by Ogra is approximately 259.50 per MMBTU against notified average rate of Rs 290.42 per MMBTU. The notified gas tariff will generate revenue receipts which are estimated to be Rs 12 billion higher against the required revenue receipts under what was called as rate of return of 17 percent of average net asset value, a doctrine introduced by Asian Development Bank in the past, Engr. M.A. Jabbar maintained.
He was also critical that the manufacturing economy with less than 20 percent share in GDP contributing more than 60 percent to the federal taxes remains under pressure of higher cost of doing business.
Engr Jabbar on the industrial gas tariff said that the gas tariff prior to that notified with effect from July 1, 2009 was 339.43 per MMBTU and the same post-notification has been reduced by about 4 percent. On the basis of Expected Revenue Receipts there should be further reduction of 10 percent in the notified gas tariff of Rs 324.30 per MMBTU, the SITE Association chief maintained.-PR
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