SSGC seeks Rs1,013/MMBTU increase in FY23 gas tariff

SSGC filed a petition for the increase in gas tariff with Oil & Gas Regulatory Authority (OGRA) under Section 8 (1) of OGRA Ordinance 2022 for the determination of its estimated revenue requirements/prescribed prices for FY2023.

The gas utility projected Rs88.798 billion as shortfall in its total revenue requirement, estimated at Rs286.724 billion for next fiscal, whereas sale revenue at the current prescribed price has been figured at Rs.197.926 billion.

Besides, SSGC also estimated RLNG (regasified liquefied natural gas) cost of service at Rs16.47 per MMBTU with effect from July 01, 2022.

Moreover, the exclusive rights of SSGC in its franchise areas like Sindh and Balochistan expired as per the respective license; however, the company has projected a cost of Rs1.395 billion for the construction of 189 km distribution mains to connect various new towns and villages.

According to the petition, the revenue requirement will enable the company to meet its cost of gas, operating cost, and return on assets.

The cost of gas is linked to international prices of crude oil/fuel oil in accordance with the agreements between the federal government and gas producers.

OGRA will also take up the issues related to the company’s claim of Rs22.585 billion on account of transmission & distribution costs for FY 2023, considering the fact that indigenous gas suppliers are declining.

The company also claimed a cost of Rs2.761 billion on account of credit loss in the light of compliance of IFRS 9, which it said was justified based on the fact that it was operating under a monopolistic regime and was less exposed to financial risks.

The regulator will also look into the company’s claim about capital expenditure amounting to Rs37.618 billion against indigenous gas and RLNG to ascertain whether it is cost effective and economically efficient to include in the rate base.

SSGC’s claim over its Unaccounted For Gas (UFG) control activities will also be reviewed in view of 13.98 percent UFG projected by the company.

OGRA will also vet the company’s request for addition of 132,000 new domestic connections for indigenous gas supply and 713 industrial/commercial connections for RLNG to determine its justification while ensuring the continuity and security of gas supply to existing as well as prospective consumers.

OGRA will hold public hearings in Quetta and Karachi on April 5 and April 7 2022, respectively, to decide on SSGC’s demands for an increase in gas tariff for domestic, industrial, and commercial consumers .

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