SNGPL, SSGC seek another natural gas tariff hike of 30 percent

[Naveed Yaseen]

By Zafar Bhutta

ISLAMABAD: Once again, the Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) have sought around 30 percent hike in gas tariff based on rupee’s depreciation against the dollar, which would be implemented on January 1, 2009.

“During the last few months, the rupee’s depreciation has been around over 30 percent against the dollar and these gas utilities have sought around 30 percent gas tariff hike in their separate petitions filed in the Oil and Gas Regulatory Authority (OGRA),” a source said. “It is shocking for the consumers that natural gas is the local production and now the consumers would be paying heavy price of the rupee depreciation. This is only because of the faulty agreement that former governments had made with gas companies,” he added.

These companies have been seeking the gas tariff hike in the past basing their petitions on the crude oil prices in the international market and now when the crude oil prices have fallen during the recent months, gas utilities are now seeking gas tariff hike based on the rupee’s depreciation against the dollar.

The consumers have faced 31 percent hike in gas tariff from July 1, 2008 and if the gas utilities are allowed to charge 30 percent hike in gas tariff, the consumers would be facing 61 percent hike in gas tariff rates in the current financial year 2008-09.

A senior official of OGRA told Daily Times that the price hike sought by two main gas utilities SSGC and SNGPL on the ground of falling rupee value against dollar is unjustified.

He said this increase, if the government allowed, would definitely hurt the popularity graph of the newly elected government, which was already under severe criticism due to increase in power and oil prices.

The official said that gas prices in Pakistan are linked with crude oil prices in the international market and now the international oil prices have declined almost half of the total but these gas distribution companies have sought 30 percent hike in gas tariff based on rupee depreciation against dollar value.

He said that both distribution companies have miserably failed to control the gas theft in the industrial and commercial sectors and are trying to hike their inefficiencies by seeking unjustified hike in gas tariff from the next calendar year 2009.

He said that OGRA had accepted the petition and the authority has started the process of the petition and will hold hearings of these petitions soon.

He said that after the decision, OGRA would send a decision to the government for the notification. As per rule, if government did not notify the decision, the decision would automatically be implemented, he said.

The government had notified 5.6 percent hike in gas tariff in the corresponding period of January 1, 2008 but it was an astonishing fact that the government had notified 31 percent hike in July 1, 2008 that was quite higher as compared with the former notified gas tariff of 5.6 percent. It was another shocking situation that OGRA had recommended the federal government to notify 26 percent hike in gas tariff but the government notified 31 percent hike. This was despite the fact that the government had the authority to notify less than allowed by OGRA but it gave additional hike in gas tariff from July 1, 2008.

Official said that consumers are forced to pay the price of gas that has been consumed by theft and leakage also known as Unaccounted for Gas (UFG) by two utilities SSGC and SNGPL that witnessed a loss of Rs 21 billion during the current financial year 2007-08.

These losses stood at Rs 15 billion during the last financial year 2006-07 due to faulty operations of two major utilities SSGC and SNGPL, the official added. Gas stakeholders are going to submit their reservations to the government about these higher losses by the gas utilities.

He was of the view that the utilities are bound to follow the international standards to retain the losses in the range of Rs 2 billion to Rs 3 billion per annum. But these utilities are violating the international law on one hand and seeking the gas rates to charge from gas consumers on the other side.

He told that the continued rising wastage of gas in billions of rupees by these two utilities has been a major concern for the OGRA but despite that fact these losses in terms of theft and leakage are being charged by raising the gas tariff hikes from the consumers who are paying bills, official added.

http://www.dailytimes.com.pk/default.asp...2008_pg5_1