Sui Northern Gas Pipelines Limited (SNGPL) and Sui-Southern Gas Company (SSGC) have requested the government to approve increase in gas prices by at least 45 percent, saying that as a result of consumer gas price freeze the distribution companies'' debt has crossed Rs 100 billion mark in the wake of higher gas prices to producers.
According to sources in the Ministry of Petroleum and Natural Resources, during past three years the government due to political reasons did not increase the consumers'' gas prices, resultantly over 45 percent accumulated gas price increase is now required to keep the gas companies afloat. The sources said: "To protect both the gas companies from bankruptcy, an increase of Rs 125 per Million British Thermal Unit (MMBTU) in consumer gas price is required. They said that the consumers'' gas price in Pakistan is linked to international oil prices.
The gas utilities increased wellhead gas prices to gas producers while as per law consumer gas prices should be revised after every six months, sources said. The Ministry has declined to increase prices despite a meager 10 percent increase already allowed by Oil and Gas Regulatory Authority (Ogra) in June 2014. As per rules, the government was obligated to increase price after 40 days when Ogra allow the same under the Ogra law which however is pending to date.
Sources said that Ogra was also flouting its own law by not issuing revised sale price notification. Ogra has also declined to implement Economic Co-Ordination Committee of the Cabinet (ECC) decision of November 2014 regarding fixation of Unaccounted for Gas (UfG) benchmark, which is leading the companies to bankruptcy. Sources said that the Petroleum Ministry recently announced a possible 15 percent increase in gas prices, which will not be sufficient to protect the gas companies from default.
The officials said that some top officials of the Petroleum Ministry are deliberately trying to delay the increase in consumer gas prices so that the share prices of both the gas companies further declines which will lead to the bankruptcy of the gas companies and finally these will be privatised.
The officials said that the Ministry wants to handover the transmission system of both the gas utilities to Interstate Gas System (ISGS) and Government Holdings Limited (GHPL) which at present are owned by the Petroleum Ministry. Sources also revealed that Pakistan was importing LNG at higher price as compared to India, saying that Pakistan is paying at least $1 dollar higher per Mmbtu.
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