OGRA holds hearing today on SSGC petition for increase in gas prices


Opposing the Sui Southern Gas Company demand for an increase of Rs 153.16 per MMBTU in gas prescribed tariff, All Pakistan Textile Mills Association (APTMA) has requested Ogra to decrease it and fix it at Rs 450/MMBTU for export oriented zero rated industries.

Oil and Gas Regulatory Authority will hold public hearing today (Monday) on the SSGC petition for the increase of Rs 153.16 per MMBTU in the prescribed prices of gas for 2021-22 to meet the revenue shortfall and RLNG services.

According to the petitions, SSGC has asked for estimated revenue requirement (ERR) for financial year 2021-22, sought the net increase in prescribed price of gas by Rs 153.16 per MMBTU. The company has requested the Authority to approve an increase of Rs Rs34, 994 million or Rs 109.78 per MMBTU in indigenous gas business and estimated RLNG cost of service of Rs16.715 billion or Rs43.38 per MMBTU in RLNG business with effect from 1st July 2021 for the next fiscal.

However, All Pakistan Textile Mills Association, Sindh-Balochistan who is also intervener in the hearing has requested to Ogra to lower all prescribed prices and the gas price for export oriented zero rated industries, including its associated power generation plants to be fixed at Rs 450/MMBTU

As per APTMA wellhead Gas Price to SSGCL is $4.46/MMBTU while in other countries wellhead gas price is $ 1.5 to $ 2.5/MMBTU. The textile mills have asked that SSGCL may take the matter to CCI on urgent basis. Ogra may take an interim decision to keep the wellhead price at $2.0/MMBTU being the maximum in our competition countries.

APTMA has requested the regulator to disallow many of adjustments. Out of box solutions needed, therefore Ogra may recommend utilization of GIDC to cause reduction in gas prices.

APTMA has further said that UFG, Induction of LNG and Wellhead prices are not Sustainable and need major downward revision. Reduction of indigenous gas is not Sustainable and Ogra/SSGCL needs to alert the Government, said APTMA.As per Ogra Ordinance 2002, it is required to minimise economic distortions, send appropriate price signals and protection of consumers.

SSGC income from sale of LPG, NGL and Condensate has dropped from Rs 1.5 billion to a loss of Rs 5 million. That is a shock of Rs 1.5 billion to the consumers. Ogra is requested to reinstate this revenue stream to at least 15 per cent higher than last year, around Rs 1.75 billion. Similarly other revenue has dropped by 10 per cent, instead of increasing by 10 per cent at least. On LPG Air Mix Subsidy the intervener said the expense of Rs 944 million causes a profit of Rs 160 million. Therefore, Rs 944 may be reduced to 784 million.

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