ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has allowed 5.4 percent increase in the gas tariff while determined review estimated revenue requirement (ERR) of the Sui Southern Gas Company (SSGC) for financial year 2020-21.
The oil and gas regulator has allowed an increase of Rs14,270 million shortfall in the ERR for financial year 2020-21 including prior year shortfall of Rs50,983 million.
The prescribed price at Rs778.59 per mmbtu has been determined for the said period. Current sale price is at higher side, resulting in no impact on price.
The regulator has recommended average prescribed price at Rs636.07 per mmbtu.
Increase in average prescribed price after previous year shortfall is Rs39.89 million.
Total ERR including prior year shortfall has been determined at Rs286,257 million.
The SSGC is catering consumers of Sindh and Balochistan.
In its review petition, the gas company had projected a shortfall in revenue requirement for financial year 2020-21 at Rs28,242 million, seeking increase in average prescribed price by Rs78.95 per mmbtu in its prescribed price effective from July 1, 2020.
Besides, the petitioner had estimated RLNG cost of service at Rs10.66 per mmbtu for the current financial year.
The authority has also allowed the gas utility to increase the gas meter rent from Rs20 per month to Rs40 per month from domestic consumers with effect from September 1, 2020.
Accordingly, additional revenues amounting to Rs635 million in respect of meter rental has been included.
In its decision the OGRA states, “If federal government fails to follow advice within the said 40 days and the prescribed price for any category of retail consumers determined by the authority is higher than the most recently notified sale price for that category of retail consumers, the authority shall be obligated to notify in the official gazette the prescribed price as determined by the authority to be the sale price for the said category”.
The regulator suggested that the petitioner should focus and make concerted efforts on reduction of UFG as the authority allowed an aggregate of Rs28 billion additional expenditure to control UFG during the last 10 years (2010-2019).
It also asked the gas utility for improvement of internal control systems, increase of efficiency, quality of service, emergency response plan, and effective cost control, reduction measures should be taken to remain financially viable instead of making all out efforts to seek passing on of costs associated with its own inefficiencies, malpractices, thefts, bad debts and alike to the consumers.
The petitioner had projected to increase in cost of gas for the said year based on its projections of international price of crude and HSFO.
The petitioner has used actual gas purchase volume for July and August 2020 and estimated volume for September 2020 to June 2021.
The prices from July-December 2020 had been taken at actual oil prices.
The second half (January to June 2021) had been drawn up from the actual monthly average of crude/HSFO up to October 12, 2020.
The rate of October 12, 2020 is applied for the entire month of November 2020.
Copyright Business Recorder, 2021