Ministry ready to raise gas prices by 15-96.6 percent: Prime Minister''s approval awaited
The Ministry of Petroleum and Natural Resources is ready to notify increase in natural gas prices by 15 to 96.6 percent for different consumers categories immediately after Prime Minister Yousaf Raza Gilani approves the summary, official sources told Business Recorder.
The Economic Coordination Committee of the Cabinet in its meeting on June 30, 2011, presided over by Minister for Water and Power Naveed Qamar, approved the proposed increase in natural gas prices, but directed the Petroleum Ministry to seek Prime Minister''s consent before issuance of the notification. According to the Ministry, the purpose of increase in natural gas prices is to minimise differences between the locally produced and imported gas prices.
"Prices on which people are expecting natural gas is not feasible. We have also to look for the E&P companies," said Minister for Petroleum and Natural Resources Dr Asim Hussain. Both gas utility companies, viz Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC) are engaged in gas purchase from exploration and production companies and transmission, distribution and sale thereof to various categories of consumers.
They are operating on cost plus return on assets formula under licences from Oil and Gas Regulatory Authority (Ogra). Section 8(1) of the OGRA Ordinance 2002 empowers Ogra to determine the estimated revenue requirements of its licences. Ogra has determined the estimated revenue requirements for both gas companies for financial year 2011-12 and to meet the revenue requirements also advised prescribed prices of natural gas for each category of retail consumers effective from July 1, 2011. A comparison or present gas sale prices and prescribed prices as determined by Ogra is as follows:
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Existing
Sale Price Revised prescribed price (Rs/ MMBTU) % age
Rs/ MMBTU SNGPL SSGCL Max increase
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Domestic
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0 - 100 m3 95.00 101.48 107.87 107.87 13.55%
101 - 300 m3 190.00 202.96 215.74 215.74 13.55%
301 - 500 m3 800.00 854.58 908.39 908.39 13.55%
Above 500 m3 1006.40 1075.07 1142.75 1142.75 13.55%
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Bulk Domestic (C - 300 Above 500 m3 as per domestic)
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Above 300 m3 383.42 383.92 435.37 435.37 13.55%
Commercial 463.76 464.36 526.59 526.59 13.55%
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Special commercial (0 - 300 m3 as per domestic)
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Above 300 m3 463.76 464.36 526.59 526.59 13.55%
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Fertiliser
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-Feed Stock (Old) 102.01 102.01 102.01 102.01 0.00%
-Feed Stock (New) 59.60 59.60 59.60 59.60 0.00%
-Fuel Stock 382.37 382.87 434.18 434.18 13.55%
General Industry 382.37 382.87 434.18 434.18 13.55%
CNG Stations 503.64 504.29 571.88 571.88 13.55%
Cement Factories 536.42 537.11 609.10 609.10 13.55%
WAPDA/ KESC 393.79 394.30 447.14 447.14 13.55%
IPPs 332.36 332.79 377.39 377.39 13.55%
Liberty Power* 990.97 1262.60 1262.60 27.41%
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--- Gas sale price for Liberty Power is fixed at 100 percent parity of HSFC in accordance with approval of ECC of the Cabinet vide case No ECC.45/05/2000 dated 8.3.2000.
According to official documents, Ogra requested the federal government to advise category-wise minimum charges and sale prices based on the revision of prescribed price under section 8(3) of the Ogra Ordinance, within forty (40) days of the decision.
Section 8(4) of the Ogra Ordinance, 2002 empowers Ogra to notify the prescribed prices as sale prices if federal government fails to advise sale prices within 40 days. In such a situation, the prices will not only increase but different set of prices will prevail in the franchise areas of both gas utility companies.
The document further shows that a meeting was convened on June 29, 2011 between the Minister for Petroleum and Natural Resources, which was attended by Secretary, Finance Division, Secretary, Petroleum and Natural Resources, Member, Energy, Planning Commission, and Ogra to discuss the gas prices.
The meeting observed that gas prices are generally much lower than other alternative fuels in all sectors and the need for its rationalisation was underscored. After detailed discussions and examination of gas prices for each sector, following were recommended in the meeting:
1- 15.00 percent increase in gas sale prices for domestic including bulk domestic meter consumers), commercial, cement and power plants of Wapda/KESC.
2 -18.43 percent increase in gas sale prices of industrial sector (including textile industry), captive power and fuel stock of fertiliser plants to equate prices of these sectors with the price of gas for Wapda/KESC to bring uniformity.
3- 36.26 percent increase in gas sale price for IPPs to equate it with gas sale price for Wapda/KESC.
4 - 69.05 percent increase in gas sale price for CNG stations to bring the consumer price of CNG at 65 percent parity with petrol.
5 -96.06 percent increase in gas sale price for fertiliser feed stock for old plants for gradual elimination of subsidy.
6 - No change in gas sale price for feed stock for new plants and for additional volumes allocated for BMR.
7- No gas allocation will be done to fertiliser sector in future at subsidised rate in any form.
8 -No bulk meter connections will be provided to housing colonies. Further, bulk meters at existing colonies will be gradually shifted to standalone meters at individual premises.
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