SSGCL allowed 9.23 percent provisional hike in gas price: effective July 1, 2010

Oil and Gas Regulatory Authority (Ogra) has allowed Sui Southern Gas Company Limited (SSGCL) provisional raise in gas price by 9.23 percent (Rs 22.92 per mmbtu) on the basis of average prescribed price effective July 1, 2010. But the authority has made downward provisional revision of 2.55 percent (Rs 4.53 per MMBTU) in the average prescribed price of Sui Northern Gas Pipeline Limited (SNGPL).
Ogra has allowed uniform reduction in gas price for both SSGCL and SNGPL domestic consumers by Rs 2.53 to Rs 21.92 per mmbtu. Ogra has sent its decision to federal government to notify the new gas prices effective July 1, 2010.Federal government is to notify the new gas prices within 40 days.
The prescribed price in case of domestic category of SSGC consumers has, however, been decreased by 2.55 percent to keep it at par with SNGPL. Also, prescribed price for feedstock gas supply to the fertiliser consumer has been determined in accordance with GoP policy and no change in its price has been made.
Ogra has estimated SNGPL net operating income at Rs 211,138 million against revenue requirement of Rs 208,271 million and thus there is a surplus of Rs 2,867 million in its estimated revenue requirement. In order to adjust this surplus, the authority has made, on provisional basis, downward revision of 2.55 percent (Rs 4.53 per mmbtu) in the petitioners' average prescribed price. Ogra allows Rs 318 million on account of salaries and wages in respect of sacked employees.
SSGCL had sought increase of Rs 60.35 per mmbtu in the current average prescribed price, but Ogra has allowed raise in gas price by 9.23 percent (Rs 22.92 per mmbtu). On the other hand, SNGPL had sought increase in gas tariff by Rs 20.36 per mmbtu, which was turned down by the Ogra. The authority provisionally has allowed SSGCL Rs 863 million on account of re-instated employees, subject to the condition that the petitioner will submit comprehensive plan, coupled with training and skill development strategy, to ensure judicious and effective utilisation of additional workforce within two months of issuance of this Order.
According to Ogra decision regarding SSGCL, the price for the domestic consumers has been reduced by Rs 2.53 to Rs 21.92 per mmbtu. For commercial consumers, the price will increase from existing Rs 399.61 to Rs 436.48 per mmbtu, for industrial consumers - Rs 329.48 to Rs 359.88 per mmbtu and Rs 399.61 to Rs 436.48 per mmbtu for ice factories. SSGCL has been allowed to increase gas price from Rs 329.48 to Rs 359.88 per mmbtu for captive power, Rs 427.15 to Rs 466.56 per mmbtu for CNG, Rs 462.21 to Rs 504.86 per mmbtu for cement, Rs 329.48 to Rs 359.88 per mmbtu for Pakistan Steel, Rs 339.31 to Rs 370.62 per mmbtu for power stations, Rs 281.88 to Rs 307.89 per mmbtu for Independent Power Producers (IPPs).
Regarding SSGCL, Ogra decided to; (i) accept the opening balance of deferred credit at Rs 6,929 million; (ii) determine estimated addition in fixed assets at Rs 8,824 million and depreciation charge at Rs 3,192 million; (iii) determine the balance of average net operating fixed assets Rs 43,087 million as against Rs 44,120 million claimed by the petitioner for the said year. Consequently, the return required by the petitioner on its average net operating fixed assets is determined at Rs 7,325 million; (iv) determine income at Rs 116,513 million as against Rs 112,804 million offered by the petitioner; (v) determine the cost of gas at Rs 108,713 million; (vi) determine the UFG cut at Rs 2,065 million per benchmark; (vii) determine the T&D expenses at Rs 6,207 million as against Rs 6,616 million claimed by the petitioner; (viii) accept the cost of reinstated employees at Rs 863 million.
The SSGCL's net operating income is estimated at Rs 116,513 million, against the revenue requirement of Rs 124,932 million and thus there is a shortfall of Rs 8,419 million in its estimated revenue requirement. In order to adjust this shortfall, the authority has made upward adjustment of 9.23 percent (Rs 22.92 per mmbtu) on provisional basis in its average prescribed price. This increase in prescribed price will, however, not entail any increase in consumer sale prices, which are in fact being proposed to be reduced from July 1, 2010.
The gas price for the SNGPL commercial consumers has been reduced from Rs 463.76 to Rs 451.94 per mmbtu, Rs 382.37 to Rs 372.63 per mmbtu for industrial consumers, Rs 503.64 to Rs 522.75 per mmbtu for CNG stations. Rupees 536.42 to Rs 522.75 per mmbtu for cement factories, Rs 382.37 to Rs 372.63 per mmbtu for the gas used as fuel for electricity generation, steam and for usage of housing, Rs 393.79 to Rs 383.76 per mmbtu for power stations, Rs 382.37 to Rs 372.63 per mmbtu for captive power and Rs 332.36 to Rs 323.89 per mmbtu for IPPs.