Oil and Gas Regulatory Authority (Ogra) on Thursday decided to delay the decision to raise gas tariff for Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipeline Limited (SNGPL) for two months till the completion of a study on tariff regime, which would disable the government from notifying new gas prices effective from January 1, 2011.
"This is the decision of the authority (Ogra) which will be implemented," sources said adding that it was the delaying tactics on part of Ogra to delay decisions regarding hike in gas tariff sought by gas utilities. SNGPL and SSGC had sought Rs 40 per MMBTU and Rs 30 per MMBTU raise in gas tariff, respectively effective from January 1, 2011. According to past practice, Ogra was to announce decision on tariff determination by November 22.
"Now government will have to raise gas tariff in February 2011 after completion of the study," sources said, adding that Ogra will inform the Petroleum Ministry today (Friday) about its decision. The consultancy firm will be hired through bidding process which would evaluate the Unaccounted for Gas (UFG), royalty, payment surcharge and other components of gas tariff regime.
In its earlier communication sent on November 23, 2010, Ogra senior officials held Ministry of Petroleum responsible for the inordinate delay in determining new gas tariff for SSGC and SNGPL effective from January 1, 2011 due to its failure to finalise the new tariff regime.
Ogra accused Petroleum Ministry of delaying the approval of the proposed new tariff regime for regulated natural sector in Pakistan from Economic Co-ordination Committee (ECC). However, Ministry of Petroleum, sources reveal, had clearly informed Ogra in its letter sent on January 15, 2010 that Ogra may take necessary action at their end following the letter and spirit of provisions of the Ogra Ordinance, 2002. Petroleum Ministry stated that Ogra would be solely responsible for any lapse whatsoever in the matter. Ogra recently announced decisions in which it allowed SSGC and SNGPL to raise bench mark of UFG to 7 percent to meet revenue requirements for financial year 2009-10.
One major shareholder of SSGC from the private sector has also complained about Chairman Ogra Tauqeer Sadiq to the President accusing him of delaying announcing the new gas tariff, which would negatively affect the financial health of SSGC.
Ogra has conducted public hearings to determine new gas tariff for gas utilities: SSGC and SNGPL; and was to announce its decision by November 22 to enable the Petroleum Ministry to work out and subsequently notify the new gas tariff for different consumers effective from January 1, 2011. Petroleum Ministry is bound to notify new gas tariff within 40 days after Ogra decision. "But Ogra has further delayed its decision for two months on the pretext of waiting for the results of a study yet to be initiated to evaluate the tariff regime," the sources added.