ISLAMABAD: Gas consumers might face an additional burden in the form of gas price hike as Sui Northern Gas Pipelines Limited (SNGPL) has sought Rs1,294.02 per Million British Thermal Unit (MMBTU) and Sui Southern Gas Company Limited (SSGCL) sought Rs667.44/MMBTU.
According to sources, the Oil and Gas Regulatory Authority has received the application of both gas utilities (SNGPL & SSGCL) and decided to conduct separate hearings on these applications. The OGRA will conduct a hearing on the plea of SNGPL on November 14, in Lahore while the hearing of the tariff-hike petition of SSGCL will be held on November 21, in Karachi. The gas consumers who are already bearing heavy brunt of gas shortage would bear an additional burden if OGRA approves the proposed hike in the gas price as sought by both the sui gas companies, sources added.
As per details, SSGCL has sought Rs667.44/MMBTU hike in the gas price for its consumers for the ongoing financial year (FY) 2022-23 owing to revenue shortfall of Rs 184 billion while SNGPL sought Rs 1294.02/MMBTU also to meet the revenue requirements.
According to available document, SNGPL has projected a shortfall in revenue requirements for FY 2022-23 at Rs 178,814 million including Rs 445 million on account of Liquefied Petroleum Gas (LPG) Air-mix project for FY 2022-23 seeking increase in its average prescribed price by Rs 488.08 /MMBTU effective July 01, 2022. The SNGPL has also included Rs 295,268 million being shortfall pertaining to previous years, and sought total increase in average prescribed price by Rs 1,294.02/MMBTU with effect from 1st July, 2022 to compensate for increase in cost of gas and other components. Besides above, the SNGPL has estimated Re-gasified Liquefied Natural Gas (RLNG) cost of service at Rs 1,015.64/MMBTU for 2022-23 including Rs 762.44/MMBTU on account of differential impact of RLNG diversion.
The cost of gas is linked to the international price of crude oil/fuel oil in accordance with the agreements between the federal government and the gas producers, said document.
SSGCL, in its petition, has projected a shortfall in revenue requirement for FY 2022-23 at Rs 184,881 million including Rs 33,787 million of un-recoup shortfall for FY 2021-2022, seeking increase in average prescribed price by Rs 667.44/MMBTU in its prescribed prices effective from July 01,2022 to compensate for increase in cost of gas and other components. Similarly, SSGCL has estimated RLNG cost of service at Rs 26.23/MMBTU for FY 2022-23.
Sources in OGRA said that gas has become expensive following the increase in crude oil price in the international oil market while decrease in the value of Pak currency has also been causing additional burden on the gas consumers.
It is pertinent to mention here that country’s gas consumers have been facing additional burden owing to gas shortage which is mainly due to fast and continuous depletion of domestic gas reserves and significant reduction in import of gas as a couple of global gas suppliers, in violation of long-term agreements, had cancelled the scheduled shipments over the past few months after gas prices shot up in the world market while the government has been avoiding buying expensive gas from global spot markets as gas imported under long-term agreements remained cheaper. Furthermore, exploration and production companies have failed to make a big discovery that can help overcome the crisis.
OGRA in its “State of the Regulated Petroleum Industry” Report for fiscal year 2020-21, pointed out that the indigenous gas production had declined by over six percent to 2,006 million cubic feet per day (MMCFD) while gas consumption increased by over five percent which reached to 3,884 MMCFD in the financial year (FY) 2020-21.
In F.Y. 2020-21 the indigenous gas production has declined by over 6 percent to 2,006 MMCFD from 2,138 MMCFD as compared to F.Y. 2019-20, whereas gas consumption has increased by over 5 percent which reaches to 3,884 MMCFD from 3,683 MMCFD, said OGRA’s State of the Regulated Petroleum Industry Report for fiscal year 2020-21.
OGRA’s report added that the main consumer of natural gas was power sector, consuming over 30 percent (1,305 MMCFD), followed by domestic sector with 20 percent (862 MMCFD), fertilizer 19 percent (829 MMCFD), General Industry 8 percent (365 MMCFD) and captive power 5 percent (203 MMCFD) of the total gas consumed during FY 2020-21.
