Price Hike

2018-09-05T23:12:29+05:00

Acknowledgement of managerial and financial failures is a norm that departments and companies in Pakistan are reluctant to learn. And the government too has internalised this. Instead of seeking explanations for the financial mismanagement of the gas companies, the government has approved the 46% increase in the rates of natural gas as determined by Oil and Gas Regulatory authority (Ogra) in June. The increase because of the difference in the purchase and sale price of gas can be rationalised. What cannot be justified, however, is shifting the burden of losses that have incurred either because of gas companies’ or government’s incompetency on consumers.

Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) both are trying to mitigate their losses by demanding an increase in the price of gas for the organisational or governmental faults. Why should the common people suffer for the failures of either of the two?

It is not to suggest that the government should reject Ogra’s recommendation completely. However, it will be wise to thoroughly deliberate on the matter. It is true that the government provides a subsidy to the consumers –both domestic and commercial. The government instead of burdening the domestic users should evict textile, fertiliser and cement industry from getting gas at a subsidised rate.

While the exorbitant increase of 46% may be necessary from a fiscal point of view, however, the increase is sudden and significant. Instead, a progressive price increase should be made. Theft and illegal connections are the prime reasons behind gas companies’ losses. According to one report gas theft has surged to 380 million cubic feet per day (mmcfd) that is 200 mmcfd from SNGPL and the remaining from SSGC.

The amount of unaccounted for gas losses can lead to the virtual collapse of the two companies in three years. The government should tighten its noose on such practices. Overburdening the consumers, primarily domestic ones, is not a sustainable solution to the woes of gas companies.

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