The government has decided to increase natural gas price for all categories of consumers by up to Rs 31.12 per MMBTU effective from 1 January next year. Official documents obtained by Business Recorder showed that Oil and Gas Regulatory Authority had approved the increase in gas tariff for Sui-Northern Gas Pipelines Limited (SNGPL) and of Rs 28.28 per MMBTU for Sui-Southern Gas Company Limited (SSGC) effective from January 1 till June 1 next year.
"The Authority after an in-depth analysis of estimates examined petitions of SNGPL and SSGC in the light of the policy framework and relevant rules so that only prudent, cost-effective and economically efficient expenditure should be allowed. Accordingly, the net increase in gas tariff for SNGPL has worked out to Rs 31.12 per MMBTU, which translates into 9.87 percent increase in category-wise prescribed prices effective January 1, 2013. The Authority has worked out to Rs 28.28 per MMBTU for SSGC, which translates into 6.14 percent increase in category wise prescribed prices effective January 1. The Authority is of the firm view that below listed factors needs utmost consideration of the FG, in order to rationalise the consumer gas prices in the public interest," the document stated.
SNGPL had sought an increase of Rs 67.66 per MMBTU in the average prescribed price with effect from January 01, 2013 primarily owing to increase in well-head gas price due to devaluation of rupee parity against dollar, increase in Transmission and Distribution (T&D) cost along with operating cost of new sub-region Vehari. SNGPL requested the Authority to allow Rs 9.4 billion additional expenditure on account of distribution, development, new connections, information technology and Uncounted for Gas (UFG) reduction plan for the period. Moreover the company has also requested OGRA for Rs 2 Billion on account of Human Resource cost in addition to above increase claimed by SNGPL.
The Authority has allowed Rs 1.5 billion on account of UFG reduction plan for the said year as requested by the petitioner (SNGPL) since it has appreciated petitioner's UFG control related activities and provided budgetary support to control this menace.
Cost of New Sub- Region (Vehari): The Authority has allowed 29 million capital and Rs 7 million operating expenses under this head for the said year in view of operational requirement of the petitioner.
Human Resource Cost: The Authority has allowed Rs 1 billion additional amount on account of HR cost on provisional basis in order to enable the petitioner to meet the legitimate demand of the its employee's particularly sub-ordinate staff. Final adjustment under this head will be made after the outcome of the HR benchmark study which is in progress.
Fixation of Unaccounted for Gas level at 4.5 percent: The Authority, while taking into account the view point of all stakeholders, determined the UFG benchmark at 4.50 percent.
Surcharge and interest on arrears of gas sales: The Authority treated expected proceeds from this head as operating income, in accordance with DERR for the said year.
RLNG projects/LNG Pipeline Infrastructure: The petitioner (SSGC) claimed capital expenditure of Rs 1.064 billion and revenue expenditure of Rs 127 million as part of revenue requirement for the said year. Natural Gas Efficiency Program (NGEP): Rs 198 million has been allowed on account of NGEP as requested by the petitioner for the said year and appreciates and supports petitioner's effort to control UFG control related activities.
Fixation of Unaccounted for Gas level at 7 percent: UFG disallowance has been calculated at 7 percent in line with the interim stay granted by the Sindh High Court. Revenue Shortfall of FY 2011-12: The petitioner (SSGC) has requested to include the revenue shortfall arising from the determination of Review of Estimated Revenue Requirement (RERR) of 2011-12 as part of the revenue requirement for the said year. The petitioner has submitted that gas development surcharge to the extent of Rs 1,663 million is available in FY 2011-12 to adjust the shortfall for the same period. In view of above, a provisional amount of Rs 2,000 million has been included in tariff calculation for said year. The Authority will adjust the difference, if any, in the forthcoming determination.
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