SSGC wants OGRA to allow increase in gas price

According to Motiwalla, the increase in gas prices would adversely affect the textile sector. PHOTO: FILE

According to Motiwalla, the increase in gas prices would adversely affect the textile sector. PHOTO: FILE

KARACHI: The Sui Southern Gas Company Limited (SSGC) has urged the regulator to allow increase in gas price by Rs17.42 per million British Thermal Units (mmbtu), which would be invested in laying pipelines for transmission of imported gas and not impact existing consumers.

“The proposed increase will not impact SSGC’s (existing) consumers,” said High Court Advocate, on behalf of the gas utility firm at a public hearing conducted by the Oil and Gas Regulatory Authority (Ogra) on Tuesday.

“The increase would be charged from consumers who utilise imported gas (Re-gasified Liquefied Natural Gas},” he told The Express Tribune on the side-lines of the hearing.

During a presentation before the regulator, he informed that the company was facing a shortfall of Rs6.80 billion or Rs17.42 per mmbtu in the estimated revenue requirement for the fiscal year 2016-17. “Over 88% (Rs6,006 million or Rs15.39 per mmbtu) of the total shortfall relates to RLNG,” he said.

The utility firm has been supplying most of the imported gas (RLNG) to power producing plants and CNG filling stations located in Punjab through its pipeline network connected with the Sui Northern Gas Pipeline Limited (SNGPL).

It has also supplied RLNG to fertiliser manufacturers in different parts of the country.

Ahmad added that the utility firm was not charging late payment surcharges from firms including K-Electric and Pakistan Steel Mills (PSM). However, it continued to pay the surcharges to exploration and production companies due to delayed payment from its bulk consumers. Therefore, it should be allowed to inform the exempted surcharges to its consumers in the column of expenditures. He added that factors playing critical role in calculating line losses i.e. Unaccounted for Gas (UFG), have drastically changed over a period of time. Accordingly, the new factors should be accounted-in while KPMG is  conducting a new study to calculate the line losses.

The factors that should be kept in mind while conducting the study include surge in customer base to 2.2 million from 1.5 million years back, rise in number of towns on its network to 2,700 from 1,000 and increase in its network size to 50,000 from 30,000 earlier.

At present, SSGC is allowed to account-in maximum 4.5% line losses against estimated 12-13%, it was learnt.

Proposed increase is illegal

SITE Association of Trade and Industry Representative Zubair Motiwalla said the proposed increase of Rs17.42 mmbtu was illegal. “Authorities cannot do this while another case of 23% increase in gas price for industries is already sub-judicious in a court.” “We (the industries) have taken a stay order from court against the proposed increase of 25%,” he said.

According to Motiwalla, the increase in gas prices would adversely affect the textile sector. “We (businessmen) are for money. If our business is affected, we will shift to another business and in that case, employees would be put on stake.”

“Textile exports, which are the single largest exporting segment of the country, declined by 18% in the fiscal year ended June 30, 2016. If the cost of doing business is not slashed, the exports would continue to dwindle,” he said.

He asked the authority to withdraw the element of cross-subsidy from the tariff being charged from the textile sector and being paid to the fertiliser makers.

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