The management of Sui Southern Gas Company (SSGC) has issued a stark warning, stating that the company faces financial peril if gas prices are not increased promptly.
During a public hearing conducted by the Oil and Gas Regulatory Authority (Ogra) on Monday, SSGC requested a price hike of Rs274.40 per million British thermal units (mmBtu) effective from July 1, 2024, to meet its revenue target of Rs359 billion.
The company emphasized the challenging situation it faces, paying for gas purchases in dollars but selling to consumers in rupees, leading to significant receivables amounting to Rs300 billion over the past two years. Additionally, the delay in notifying gas prices has exacerbated cash flow issues for SSGC.
The Chief Financial Officer highlighted that the government’s delay in notifying gas prices has caused cash flow problems for the company. He urged the government to address the revenue shortfall in Balochistan while revising gas prices.
While some industry representatives opposed the proposed tariff hike, citing difficulties for the industry to survive, others advocated for market deregulation and competitive pricing in the gas market to promote efficiency and innovation.
The current scenario with high energy costs, including gas and electricity tariffs, is posing challenges to firms’ competitiveness in international markets and threatening national security by hindering industrial growth and increasing dependence on debt.
In addition to financial challenges, SSGC faces technical issues such as unaccounted-for gas (UFG) rates that exceed global benchmarks, indicating systemic challenges that need to be addressed.
Story by Zafar Bhutta
