ISLAMABAD - The KP government has rejected the SNGPL proposed hike of 78.4 percent in prices of gas from Rs445.21 per MMBTU to Rs812.1 for FY 2018-19, saying instead of increase the company should improve its management and reduce its losses.

In a public hearing on SNGPL petition for gas hike, conducted by Oil and Gas Regulatory Authority (Ogra), chief executive officer (CEO) of KPOGCL said that instead of price hike the gas company should improve its UFG as every year millions of rupees are spent by SNGPL on unaccounted-for gas (UFG) control annually but still the losses are sky high. FY 2018-19, SNGPL proposed budget of Rs1,313.968 million for UFG (Rs616 million last year) which means that the UFG is on the rise.

Government of KP completely rejected the proposal and insisted that the gas prices should not be increased rather decreased through better planning, management and following international best practices. Government of Khyber Pakhtunkhwa intervened in the public hearing on behalf of the consumers of KP.

The Ogra conducted a public hearing on Monday, regarding Sui Northern Gas Pipeline Limited’s (SNGPL) estimated revenue requirements for FY 2018-19. The SNGPL had proposed a 78.4 per cent hike in prescribed prices of Rs445.21 per MMBTU to Rs812.1 for FY 2018-19 which will eventually increase the end consumer gas prices for FY 2018-19.

The KPOGCL CEO in his presentation said that petition submitted by SNGPL was not drafted in light of Article 158 of the Constitution which states that gas priority shall be given to the province in which gas is being produced to fulfill its requirements. The representative from KP government stated that as per the petition, SNGPL had not planned any transmission network in KP for the FY 2018-19. Even the distribution network was planned for specific region and not for the whole KP. Only 14 per cent of the total gas connections were allocated to KP which was a breach of Article 158, Supreme Court directives, Peshawar High Court orders, prime minister’s directives and federal minister for energy’s decisions.

He further stated that SNGPL had denied purchasing gas from Baratai Well which was a recent discovery by OGDCL & KPOGCL. 30 MMCFD of gas was capped at Baratai and the country was losing billions of rupees foreign exchange annually on account of import of LNG and royalty.

Chairperson Ogra didn't let the representative of KP government to complete the presentation and ended the hearing on the note that Ogra had no mandate to implement the constitutional provisions i.e. Article 158.

He said that instead of increasing the price, SNGPL may work on controlling UFG losses. Increase in prices will not only negatively affect the GDS of KP but will also put burden on the consumers of all sectors of the KP. Better management and planning will result in reduction of prescribed prices even below the present rate.

He alleged that KP gas infrastructure was choked with no real improvement in past 10 years. KPOGCL stated 440 MMCFD KP production in 2014 but SNGPL had no expansion plans. He said that change of BOD of SNGPL was need of the hour.

“The authority is requested to decide that SNGPL to plan & execute infrastructure development in all parts of KP and share the same with GoKP in one week time. The Ogra is requested to ask SNGPL to provide 500,000 new gas connections in all parts of KP during FY 2018-19 and plan be provided to KP govt in one week. Till then the petition may be kept pending and next hearing date to be given.”

He requested the Ogra to direct SNGPL to share UFG control plan with GoKP and also share previous years UFG budget utilization sheets. Where and how millions of rupees were spent to control UFG. Rs20 billion of UFG to be deducted from shareholders dividend or if no dividend then Shareholders to inject Equity.”