October 19, 2023 (MLN): With the objective of generating surplus revenue beyond the requirements of SUI companies, the Petroleum Division of the Ministry of Energy has formulated a tariff proposal of up to Rs2,900 per MMbtu for all consumer categories.
The Economic Coordination Committee(ECC) of the Cabinet will likely approve the hike in gas prices by next week.
Sui Southern Gas Company Ltd (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL) are public sector gas utility companies licensed by the Oil & Gas Regulatory Authority (OGRA) for the purchase, transmission, distribution, and sale of gas to consumers in the country.
OGRA determines the annual revenue requirements of both SUI companies in accordance with the respective license conditions, Natural Gas Tariff Rules 2002, and Section 8 of the OGRA Ordinance 2002 (Annex-I).
OGRA issued its determination of Estimated Revenue Requirements (ERR) for FY 2023-24 on 02.06.2023 for both SNGPL and SSGC.
SNGPL required a revenue of Rs358 billion and SSGCL required a revenue of Rs339bn in FY23-24.
Pursuant to Section 8(3) of the OGRA Ordinance 2002, the Federal Government was required to advise OGRA to revise the consumer gas prices in accordance with Government policy with effect from July 2022 within 40 days of the determination of OGRA.
However, the revision in consumer gas prices could not be done as of date. Due to price inaction, the Sui companies have already carried the revenue shortfall for the period July to September 2023.
This has resulted in the accumulation of revenue shortfall/tariff differential amounting to Rs878bn (SSGCL: Rs450bn, SNGPL: Rs332bn) as of June 2023.
This is part of the Petroleum sector's total circular debt stock (excluding late payment surcharge) of approximately Rs2.1 trillion.
Price inaction until June 2024 will result in a revenue shortfall of Rs185bn on natural gas only.
Companies have already carried a revenue shortfall of Rs46bn for the period July to September 2023.
On the other hand, the deficit on RLNG diversion of Rs210bn is anticipated during this winter, bringing the total shortfall to Rs395bn.
The detail of the proposals for price revision is as under:
- Domestic (Residential)
The average prescribed price of each molecule is Rs1,291/MMBtubut the protected category of domestic consumers is still paying a tariff of Rs121/MMBtuto Rs.250/MMBtuin 4 consumption slabs.
There will be no increase in tariff for the protected category (57% of the domestic consumers) however, the fixed monthly charge is proposed to be increased from Rs10 to Rs400 for this category.
The tariff for nonprotected domestic consumers will have a marginal increase in initial slabs with progressivity in tariffs for onward stabs until the highest consumptions where the tariff will be aligned with that of LPG cost.
This is in order to curb unbridled consumption while urging those who can afford to switch to alternate fuels to conserve gas.
The previous slab benefits are being maintained up to a consumption of 4 hmi. There should be no previous slab benefit in the last stab of the nonprotected domestic category.
The nonprotected category fixed charge is proposed to be increased in 2 slabs: the fixed monthly charge for consumption up to 1.5 hm3 will be Rs1 while Rs.2 for exceeding consumption of 1.5 hm.
Proposed Sales Prices/ Tariff for Domestic (Residential) Consumers
| slabs | Existing Rates (Rs.mmbtu) | Revised Rates w.e.f 01.10.2023 | Effective tariff (Rs/mmbtu) | Change | Fixed Monthly Charge (Rs) | ||
|---|---|---|---|---|---|---|---|
| Existing | Revised | Existing | Revised | ||||
| Protected | |||||||
| up to 0.25 hm3 | 121 | 121 | 121 | 121 | – | 10 | 400 |
| up to 0.5 hm3 | 150 | 150 | 136 | 136 | – | ||
| up to 0.6 hm3 | 200 | 200 | 158 | 158 | – | ||
| up to 0.9 hm3 | 250 | 250 | 217 | 217 | – | ||
| Non-Protected | |||||||
| up to 0.25 hm3 | 200 | 300 | 200 | 300 | 100 | 460 | 1,000 |
| up to 0.6 hm3 | 300 | 600 | 258 | 475 | 217 | ||
| up to 1 hm3 | 400 | 1,000 | 340 | 760 | 420 | ||
| up to 1.5 hm3 | 600 | 1,200 | 467 | 1,067 | 600 | ||
| up to 2 hm3 | 800 | 1,600 | 650 | 1,300 | 650 | 2,000 | |
| up to 3 hm4 | 1,100 | 3,000 | 900 | 2,067 | 1,167 | ||
| up to 4 hm5 | 2,000 | 3,500 | 1,325 | 3,125 | 1,800 | ||
| above 4 hm6 | 3,100 | 4,000 | 2,220 | 4,000 | 1,780 | ||
- Bulk Domestic and Special commercial (Roll Tertdoor)
The tariff for Bulk consumption is proposed to be increased from Rs.1,600/MMBtuto Rs2,0001 MMBtu whereas there will be no change in tariff for the Special Commercial (Roti tandoor) category.
- Commercial Sector
Under the commercial sector, 51% of the commercial consumers of piped gas are paying RLNG prices whereas 49% are paying natural gas prices.
The existing tariff is proposed to be revised from Rs1,650/MMbtu to Rs3,900 MMbtu which is still a discount on the switching value of LNG or LPG.
This rate shall be applicable to all commercial consumers, irrespective of NG or RLNG use, to create a level playing field for all commercial consumers.
- Power Sector
There will be no change in gas tariff for power generation to avoid any burden on domestic consumers of the power sector.
- Industry Export (Process and Captive)
The natural gas tariff for the export industry, both process and captive connections will be revised to Rs.2,050/MMbtu across the country.
The estimated blended cost shall be raised to $7.5-8/MMbtu (-Rs.2,200-2,300) in South i.e., industry on SSGC network, and shall be maintained at 49-9.5/MMbtu (Rs2.610-2,760) in North i.e., industry on SNGP network over the year at current USD PKR parity and LNG rates.
Both the Sui companies will be allowed to provide affordable yet sustainable blends of natural gas and RLNG to further rationalize the prices in the North and South regions.
- Industry Non-Export (Process and Captive)
Currently, the industry in the North is charged a full RLNG tariff of $12.5/MMbtu (Rs.3.650) whereas a similar industry in the South is being charged a tariff of Rs.1.2001mmbtu for process use and a blended tariff of $5.9/MMBtu (Rs.1,710) for captive use.
In order to minimize the disparity in tariff, the non-export industry is proposed to be charged Rs2,600 MMbtu for natural gas throughout the country.
The SUI companies shall offer blended gas based on the availability of natural gas and RLNG. The blend in the South shall have a higher proportion of natural gas.
The estimated blended cost shall approximate 59/MMbtu (-Rs.2,600) in South i.e., industry on SSGC network) and $1.1.5/MMbtu (-Rs.3.340) in North (industry on SNGP network) over the year at current USD PKR parity and LNG rates.
- CNG and Cement Sectors
The proposed price of Rs.4,400/MMbtu approximates 80% of the equivalent petrol cost. A similar price is proposed for the cement sector which is only 0.4% of total NG supplies for FY 23-24.
This is in order to promote switching to alternate fuels. This shalt be applicable on any piped gas (NG or RLNG) to be supplied to the consumers under this category.
- Fertilizer Sector
Since the majority of fertilizer plants are on the MPCL network where proposed prices for Feed and fuel are Rs. 580/mmbtu and Rs1,5801 MMbtu respectively, the same prices are proposed for feed and fuel for fertilizer plants on the Sui network (FFBQL and Engro).
Revised Tariff for other categories of consumers
| Category | Existing rates (Rs/mmbtu) | Revised Rates (Rs/mmbtu) | Change | % Change |
|---|---|---|---|---|
| Bulk | 1,600 | 2,000 | 400 | 25% |
| Sp. Commercial (Roti Tandoor) | 697 | 697 | – | – |
| Commercial | 1,650 | 3,900 | 2,250 | 136% |
| Power – (KE, SNPC, EQPL) | 1,050 | 1,050 | – | – |
| Power – Liberty | 2,406 | 3,890 | 1,484 | 62% |
| Fertilizer – Feed (ENGRO) | 200 | 200 | – | – |
| Fertilizer – Feed – (FFBQL) | 510 | 580 | 70 | 14% |
| Fertilizer – Fuel | 1,500 | 1,580 | 80 | 5% |
| Cement | 1,500 | 4,400 | 2,900 | 193% |
| Export Ind – Process | 1,100 | 2,050 | 950 | 86% |
| Export Ind – Captive | 1,100 | 2,050 | 950 | 86% |
| Non Export Ind – Process | 1,200 | 2,600 | 1,400 | 117% |
| Non Export Ind – Captive | 1,200 | 2,600 | 1,400 | 117% |
| CNG | 1,805 | 4,400 | 2,595 | 144% |
To note, the price revisions proposed will be effective from October 01, 2023.
Copyright Mettis Link News
Posted on: 2023-10-19T14:46:17+05:00
