Gas tariffs likely increase for SNGPL, SSGC consumers

February 13, 2023 (MLN): Gas tariffs for consumers of the Sui Northern Gas Pipeline Limited (SNGPL) and the Sui Southern Gas Company (SSGC) will likely increase by Rs98 per mmbtu and Rs109.91 per mmbtu, respectively, in order to meet the International Monetary Fund's ninth review condition of zero growth in the gas sector's circular debt for the rest of the current fiscal year. 

Informed sources told Business Recorder that the Oil and Gas Regulatory Authority (OGRA) must raise tariffs to prevent the projected increase of Rs70 billion in the existing Rs670bn circular debt of the two gas companies. 

In a recent press conference, Finance Minister Ishaq Dar stated that the government is determined to stop further growth in the circular debt.

He said that the circular debt usually increases by around Rs170bn to Rs270bn annually, but the actual figures are held by the Petroleum Division.

An anonymous official from the Petroleum Division warned that if the 11.5% price hike for SNGPL and 11% tariff for SSGC are not implemented, the circular debt could reach Rs740bn by the end of June 2023.

Former Member Gas, Ogra, Mohmmad Arif told Business Recorder that gas companies often inflate their loss figures before finalizing their audited annual accounts.

Currently, the gas tariff for residential consumers is significantly lower than the actual cost of gas, with a price of Rs450 per mmbtu in the SSGC system against the prescribed price of Rs850 per mmbtu, and Rs 400 per mmbtu in the SNGPL system against the prescribed price of Rs1,007 per mmbtu.

The government is considering introducing the WACOG tariff to recover the RLNG cost, which is pending with the Council of Common Interests (CCI).

At present, RLNG is classified as a gas product and its cost cannot be recovered from residential gas consumers. However, RLNG valued at Rs108bn was injected into the system during the last four winters, and an additional Rs110bn RLNG is being provided in the ongoing winter season, for a total of Rs 218 billion to be directed to the domestic sector in Punjab until February 2023.

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