The Oil and Gas Regulatory Authority (Ogra) has increased the average prescribed gas prices by up to 16.37 percent for the consumers of Sui Northern Gas Pipelines Limited (SNGPL) and the Sui Southern Gas Company Limited (SSGC) besides curtailing new gas schemes and new gas connections.

On two separate decisions on the review estimated revenue requirement (REER) by gas companies for the fiscal year 2021-22, the regulator has jacked up the prescribed gas prices by 16.37 percent or Rs94/mmBtu for the consumers of SNGPL and 6.35 percent or Rs50/mmBtu for the consumers of the SSGC.

Against OGRA’s decision of August 2021, on the estimated revenue requirement (ERR) of Rs236.749 billion or Rs576.32/mmBtu, for financial year 2021-22, the SNGPL had filed a review petition demanding the ERR of Rs308.478 billion with an increase of Rs269.03/mmBtu in the average prescribed price of gas. It had requested fixing the average prescribed price at Rs845.35/mmBtu. However, the OGRA has allowed the ERR of the company at Rs227.485 billion with an average prescribed price of Rs670.37/mmBtu.

Against the regulator’s decision of Rs779.88/mmBtu average prescribed prices for SSGC, the company had filed a review petition and had projected a shortfall in revenue requirement of Rs18.4 billion for FY 2021-22 and sought an increase in its average prescribed price by Rs58.42/mmBtu effective from July 1, 2021.

The petitioner at the time had also estimated the cost of Regasified-Liquefied Natural Gas (RLNG) services at Rs30.48/mmBtu. SSGC had ERR of Rs269.086/mmBtu or fixing average prescribe price at Rs838.30/MMBtu. However, the OGRA determined the ERR at Rs266.307 billion or Rs829.48/mmBtu.

The regulator has shown serious concerns over SNGPL’s downward revision of new gas connections and gas new schemes for unknown areas in revised ERR against actual ERR for financial year 2021-22.

The gas company proposed 1.2 million connections at the time of ERR but due to limited availability of system gas requested for installation of 300,000 new gas connections in already gasified areas, which the regulator notes one fourth of the figures projected at the ERR stage for the said year.

The regulator has shown its serious concern over the gas company, which reduced size of new distribution network in new towns and villages in Punjab, KP, AJK, from 11,500 km to 5,000 km without revealing the details in the RERR.

The OGRA showed serious concern that the SNGPL has not provided specific schemes/ new town-wise details, rather reiterated that the projected 5,000kms in respect of anticipated schemes will be laid in the new towns and villages as selected by itself out of the complete list, which has already been provided to the authority. The regulator maintained that the instant claim is not convincing when compared with KMs of lines proposed at the time of ERR.

It is rather surprising to observe that the petitioner has now realised its physical and financial capacity and drastically reduced its targets by almost half.

This story was first published in Business Recorder on March 3, 2022.