Islamabad - The Oil and Gas Regulatory Authority (Ogra) has recommended an increase of up to 214 per cent in gas prices for domestic consumers.

The decision which will take effect from January 2020 will help both Karachi-based Sui Southern Gas Company Limited (SSGC) and Lahore-based Sui Northern Gas Pipeline Limited (SNGPL) to collect around Rs38 billion from gas consumers during next six months (January 1st to June 30).

The regulator has sent its decision to the federal govt, seeking advice to pass on increase in prices of gas to the consumers. The federal government has to respond to Ogra’s decision in 40 days and notify revision in gas prices for different consumers.

If notified, the said hike is likely to impact the entire economy including households and industries, severely. Resultantly, people may even witness hike in the headline inflation.

Proposes up to 214pc increase for domestic consumers

Ogra had determined the estimated revenue requirement of SNGPL for 2019-20 in May 2019 at Rs293.305 billion and shortfall at Rs89.177 billion translating into an increase of Rs236.81 per mmbtu in the average prescribed price. The SNGPL had submitted a review petition on October 15, 2019 projecting a shortfall of Rs42,296 million translating into an average increase of Rs115.54 per mmbtu in its prescribed prices. However the authority allowed an increase of Rs81.98 or 13.11 percent to SNGPL. The increase will enable the company to generate Rs30 billion extra revenue. Similarly, in its review petition, the SSGC had claimed average increase in prescribed price of Rs62.52 per mmbtu or Rs22.673 billion revenue requirement. However Ogra has allowed an increase of Rs7.812 billion or Rs24 per mmbtu.

As per Ogra’s decision, prescribed price for SNGPL have increased by13.11 percent while for SSGC it has gone up by 3.23 percent. The prescribed price for SNGPL has been increased from 626.93 per mmbtu to Rs706.91 per mmbtu while the average prescribed price for SSGC has been increased from existing Rs735.48 per mmbtu to Rs759.24 per mmbtu.

First two domestic slabs are currently highly subsidised as compared to actual cost of service of indigenous natural gas or the cost of RLNG which is diverted in winter, and the cost of alternative fuel i.e. LPG. Therefore, the same has been decided to be rationalised keeping in view the actual cost of service. Accordingly in respect of existing first slabs (upto 1HM3), the prescribed price has been determined at 50 percent of average cost of service. The next slab (upto 2HM3), prescribed price has been determined at 75 percent of average prescribed price. The existing fourth slab is, upto 3HM3 has been aligned equal average cost of service. Rest of slabs of domestic consumers have been suggested at Rs1,273 per mmbtu and Rs1,679 per mmbtu(i.e. an increase of 15 percent over the existing prices)

The highest increase was made for domestic gas consumers falling in first slab of SNGPL by 213.7 per cent and 192 per cent for SNGPL consumers.

SNGPL will collect around Rs244 billion and SSGCL Rs275 billion. SNGPL supplies gas to consumers in Punjab and KP whereas SSGC supplies gas to consumers in Sindh and Balochistan. The regulator has decided to increase gas price for domestic consumers by 191 percent, fertilizer sector 135 percent and 31 percent for consumers falling under the category of Roti Tandoor, commercial, industrial, zero-rated export industry, captive power plants, compressed natural gas (CNG), cement and power plants.

The tariff for the first slab of domestic gas consumers of SNGPL has been hiked from Rs121 per million British thermal unit (mmbtu) to Rs353.26 per mmbtu or 213.7 percent; second slab tariff Rs300 per mmbtu to Rs353 per mmbtu; third slab Rs 553 to Rs Rs530/mmbtu. However, the tariff of fourth slab has been reduced to Rs706/mmbtu from Rs 738.The tariff for fifth slab has been increased to Rs1,273 per mmbtu from Rs 1107 and six slab to Rs1,679 per mmbtu from Rs 1460 per mmbtu.

The tariff for the first slab of domestic gas consumers of SSGC has been hiked from Rs121 per mmbtu to Rs379.62 per mmbtu, second slab tariff Rs300/mmbtu to Rs379.62/mmbtu; third slab Rs 553 to Rs Rs569.43/mmbtu. The tariff of fourth slab has increased to Rs759.24/mmbtu from Rs 738.The tariff for fifth slab has been reduced to Rs1091.87/mmbtu from Rs 1107 and six slab to Rs11440.05/mmbtu from Rs 1460 per mmbtu.

The tariff for Roti Tandoor category of gas consumers has been hiked from Rs780/mmbtu to Rs1,026/mmbtu. The gas tariff for commercial gas consumer has been hiked from Rs1,283/mmbtu to Rs1,687/mmbtu. The tariff for general industry has been increased from Rs1,021/mmbtu to Rs1,343/mmbtu. For commercial sector including ice factories, tariff has been increased from Rs1283 to 1687.8 per mmbtu.

For general industry, the tariff has been increased from 1,021 to Rs1343.14 per mmbtu. For registered manufacturers or exporters of five zero rated sectors and their captive power namely textile (including jute), carpets, leather, sports and surgical goods the tariff at flat rate has been increased 786 to 1,033.99 per mmbtu. For CNG stations, the gas tariff has been increased from 1,283 to Rs1,687.8 per mmbtu. For cement factories too, the gas tariff has been hiked from 1,277 to Rs1,679.9 per mmbtu.