ISLAMABAD - AHMAD AHMADANI - Petroleum Ministry while leaving no stone unturned is all set to put additional burden on over-burdened gas consumers by asking the regulator to set Unaccounted for Gas (UfG) at 7 per cent only to benefit the shareholders of gas companies.

Though, Ogra former Chairman Tauqeer Saddiq, Member Gas Mansoor Muzaffar and Member Finance Mir Kamal Mari are currently facing National Accountability Bureau (NAB) investigations and arrests, yet the Ministry of Petroleum and Natural Resources (MP&NR) is following the track that ultimately would lead to press the consumers.

Sources informed that earlier Ogra has proposed to set UfG benchmark at 4.5-5 per cent for fiscal year 2012-13 yet Petroleum Ministry is desperately pressurising the regulator to set it at 7 per cent. They said the Authority in blatant disregard of the federal govt policy guidelines as well as applicable pricing formula being practiced since last 20 years had caused a damage of over Rs 37 billion to public at large as well as national exchequer in its gas pricing determination for FY 09-10, 10-11 and 11-12. Further, due to the wrong step of the government, the gas companies have so far managed to put multi billion rupees burden on the poor masses on account various non-operating income heads. They were of the opinion that the treatment of operating incomes as non-operating is in complete violation of existing tariff regime and policy guidelines of the federal government.

It is testimony of the fact that Lahore High Court / Sindh High Court, based on the dissent note of the Member Gas as well as the statement of the then Secretary Petroleum Imtiaz Qazi that the said treatment in favour of gas companies private shareholders will not result in any price hike for the gas consumers at large, granted stay orders to Ogra FY 2010-11 decision. Interestingly, the gas prices have since been revised upwards three times very substantively while the CNG prices have been revised countless times and taken to a record high level. Again, at the time of detailed estimation of revenue requirement (DERR) FY 2011-12 dated May 24, 2011, all the three members unanimously signed while fixing UFG at 4.5 per cent and treating the income from late payment surcharge, sale of gas condensate, meter manufacturing profit, royalty from JJVL as operating income. The same drama was also repeated in case of FY 2011-12 as well.

It is to be noted here that the same has however gone unnoticed by Securities and Exchange Commission of Pakistan (SECP) as well as the investigating agencies while the people of the country have been made hostage. Similarly, Ogra in a letter written to Petroleum Ministry requesting the PPP-led coalition government to revisit its stance and take necessary actions to vacate the high court’s Stay Order granted against Ogra regarding declaring of various sources of incomes of gas companies as non-operating incomes instead of operating incomes in the better interest of hard pressed consumers as soaring monstrous increases in gas prices have added to the miseries of general public and created hue and cry in the country.

It was also learnt from Ogra’s letter that former Secretary for Petroleum and Natural Resources Imtiaz Qazi, in Lahore High Court on December 02, 2010, had not supported Ogra’s stance regarding 2.5 per cent unaccounted for gas passed on to the consumers and earning of gas companies from different sources including late payment surcharge, meter-manufacturing plants, sale of gas condensate and royalty from Jamshoro Joint Venture Limited (JJVL) as operating income and fixing UFG (unaccounted for gas) targets per Ogra’s prescribed benchmark in the revenue requirement for financial year (FY) 2010-11.

Further, Imtiaz Qazi, incumbent Secretary for Water and Power, in his statement to the honourable court had said that by declaring different sources of earnings of gas companies including putting 2.5 percent UFG on consumers and earning of gas companies (SSGCL & SNGPL) including late payment surcharge, meter-manufacturing plants, sale of gas condensate and royalty from JJVL as non operating income instead of operating income there would be no extra burden on the consumers.

It is worth mentioning that the regulatory authority, under section 8 of the OGRA Ordinance, 2002, determines the revenue requirement of SSGCL and SNGPL in accordance with licence condition no. 5.2 of their respective licences, whereby the utilities have been ensured 17 percent / 17.5 percent return on their net average operating fixed assets. It has also been provided in the said licence condition that for the purpose of calculating the above return the prevailing methodology and procedure shall continue to be in force. Similarly, the government on October 11, 2002 has also advised that till such time an appropriate rate of return is determined by the OGRA, in consultation with the Federal Government and the licencees, the OGRA shall determine the revenue requirements of the existing gas companies on the basis of the covenants stipulated in the loan agreements of SNGPL with World Bank and SSGCL with Asian Development Bank (ADB). Besides, the term “operating revenue” means revenues from all sources related to operations, but excluding interest, dividends and other non-operating income.