February 07, 2024 (MLN): The Oil and Gas Regulatory Authority (OGRA) has granted approval for Sui Southern Gas Company Limited (PSX: SSGC) and Sui Northern Gas Pipelines Limited (PSX: SNGPL) to increase gas prices for their consumers by 5% and 36% respectively for FY24, as announced in a press release issued by the authority today.
The authority conducted a review of the Estimated Revenue Requirement (ERR) of SNGPL and SSGCL for FY24 to determine the prices at which natural gas will be sold to consumers.
Determinations of both gas companies have been sent to the Federal government for receipt of category-wise natural gas sale price advice.
SNGPL requested a 2.38-fold increase in its gas price, but upon review, OGRA allowed the entity to raise the gas price by 36%.
Comparatively, the existing average prescribed prices as demanded by SNGPL stood at Rs1,246.49/MMBTu, however, OGRA allowed an average prescribed price of Rs1,228.63/MMBTu.
Additionally, OGRA has set the net revenue requirement for SNGPL at Rs592.246 billion for FY24, as opposed to SNGPL's claimed requirement of Rs620.204bn.
It is worth mentioning that the financial impact of previous years' shortfall of Rs422.552bn, as calculated by OGRA as against SNGPL's claim of Rs427.830bn per the petition, has been referred to the Federal government for an appropriate policy decision and is, therefore, not made part of the instant determination.
Accordingly, the average prescribed price based on SNGPL’s calculation stood at Rs2,961.98/MMBTu, but due to the difference in OGRA’s consideration, the authority’s price stood at Rs1,673.82/MMBTu.
When compared with the existing average price, SNGPL asked for a hike of Rs1,715.49/MMBTu in nominal terms, while as per the authority’s decision, the gas company is only alleged to raise by Rs445.19/MMBTu.
| Demanded by SNGPL | Allowed by OGRA | |
|---|---|---|
| Sales Volume (BBTU) | 353,829 | 353,829 |
| Existing Average Prescribed Prices (Rs/MMBTU) | 124,649 | 1,228.63 |
| Revenue Requirement, net of revenues for FY 2023-24 (Million Rs) | 620,204 | 592,246 |
| Previous Year Revenue Shortfall (Million Rs) | 427,830 | – |
| Total Revenue Requirement, net of revenues (Million Rs) | 1,048,034 | 592,246 |
| Average Prescribed Prices (Rs./MMBTU) | 2961.98 | 1,673.82 |
| Increase in Price (Rs./MMBTU) | 1,715.49 | 445.19 |
| Average Increase (%) in Price | 138% | 36% |
With respect to SSGC, OGRA has allowed an average increase of 5% for the price at which SNGPL will sell natural gas to consumers.
This differs from SSGC’s demand claim for a 15% increase in price for the commodity.
This calculation is based upon OGRA authorizing the existing average prescribed price at Rs1,401.72/MMBtu, in contrast to SSGC’s demand to consider the existing price at Rs1,470.21.
A further difference was witnessed in the revenue requirement adjustment, wherein SSGC asked for Rs358.300bn inclusion and OGRA allowed Rs309.723 worth of revenue requirement for price calculations for FY24.
After factoring in these calculations, SSGC requested OGRA to increase the gas price for its consumers by Rs226.18/MMBtu. However, the authority only permitted SSGC to raise it by Rs64.68/MMBtu for FY24.
| Particulars | Demanded by SSGC | Allowed by OGRA |
|---|---|---|
| Sales Volume (BBTU) | 211,213 | 211,213 |
| Existing Average Prescribed Prices (Rs/MMBTU) | 1,470 | 1,401.72 |
| Revenue Requirement, net of revenues for FY 2023-24 (Million Rs) | 358,300 | 309,723 |
| Average Prescribed Prices (Rs/MMBTU) | 1,696.39 | 1,466.40 |
| Increase in Price (Rs/MMBTU) | 226.18 | 64.68 |
| Average Increase (%) in Price | 15% | 5% |
Through the above-mentioned determination, the Federal government has been requested for advice on category-wise sale prices for consumers.
"Any revision, as advised by the Federal government, shall be accordingly notified by OGRA. Till such time the existing category-wise natural gas sale prices shall continue to prevail," the statement concludes.
Copyright Mettis Link News
Posted on: 2024-02-07T15:52:49+05:00
