Islamabad  -   Ogra has recommended up to 188 percent increase in the gas prices for various categories of consumers for the upcoming financial year. However, this increase would require government approval.

In its determination for the Estimated Revenue Requirement of both the gas utilities – SNGPL and SSGC - for fiscal 2019-20, the Oil and Gas Regulatory Authority (Ogra) claimed that the average price increase for the gas consumers will be 47 percent.

Soon after coming into power the government of PTI had allowed an increase of 143 percent in gas prices for the ongoing financial year.

Ogra has also proposed to increase the number of slabs to 10 by adding new slabs of 110, 210, 310 and 410 cubic meters.

As per the determination, Ogra has recommended 188 percent price increase for the consumers using 50 cubic meter gas, which constitute 18 percent of the total gas users. If government approves Ogra’s recommendation, the bills of this category will go up from existing Rs274 to Rs789 per month.

Ogra has proposed an increase of 183 percent for the second slab of 100 cubic meter which will increase the monthly bills of these consumers (29 percent of total) from Rs550 to 1,555 per month.

For those consuming up to 200 cubic meter (32 percent consumers) Ogra proposed an increase of 74 percent and the bills of the category will be increased from Rs2,215 per month to Rs3,854 per month.

For the slab consuming up to 300 cubic meter (12 percent), Ogra recommends an increase of 101 percent which will enhance the bills of this category from Rs3,449 per month to Rs6,918.

Similarly, Ogra also recommended  an increase of prescribed prices for the consumers using up to 110 cubic meter, 210 cubic meter, and 310 cubic meter by 45 percent and 72 percent respectively. The proposed increase will enhance the bills of the 110 cubic meter consumers from Rs1,229 per month to Rs1,777 and the bills of the consumers of 210 cubic meter from Rs2,421 to Rs4,160 per month.

Interestingly, Ogra recommendation will lower the bills of the consumers using 310 cubic meter by 27 percent from the existing Rs10,064 to Rs7,378 per month. The bills of 400 cubic meter and 410 cubic meter (4 percent consumers) and 500 cubic meter (4 percent consumers) will also go down by 11.28 percent, 52 percent and 47 percent respectively.

The new bills of the 400 cubic meter consumers will decrease to Rs11,515 from the existing Rs12,979.The bills of consumers using 410 cubic meter will go down from Rs24,881 to Rs11,975 per month. While the monthly bill of up to 500 cubic meter will be decreased to Rs16,113 from the existing Rs30,338.

Regarding the logic for decrease in prices for the consumers using 310 cubic meters and above, Ogra has said that in order to rationalise the tariff structure, the prescribed price for the domestic and special commercial consumers, first two slabs (of up to 100 HM3) has been decided at half of the average cost of service.

For 3rd slab (of over 1-2 HM3 consumption), it has been determined at 75 percent of average cost of service, for 4th slab (over 2-3 HM3) it has been determined at 100 percent of cost of service and for last slab (over 3 HM3) it has been determined at 150 percent of the cost of service. The previous slab benefit has also been suggested for all these consumers.

The remaining unabsorbed revenue shortfall determined by Ogra has been recouped by rest of categories of consumers across the board.

Accordingly, bulk consumers of SNGPL and SSGCL would observe an average price increase of 31 percent and 20 percent respectively.

The category-wise prescribed prices determined by Ogra in pursuance of its Ordinance, 2002 are advised to the federal government. The government, within 40 days, is required to advise Ogra the category-wise sale price of each consumer for natural gas for notification.

In its petition SNGPL had demanded an average increase of 144 percent, however Ogra allowed 47 percent average hike for the gas consumers of SNGPL. SSGC had demanded an increase of 30 percent in average gas price, but the regulator allowed 28 per cent average price increase for next financial year 2019-20.

The SNGPL had estimated its revenue requirement of 274.66 billion that included Rs3,09.5 billion for ongoing financial year and Rs165.12 billion shortfall for previous years, adjustment. The regulator allowed total revenue of Rs2,93.3 billion including Rs264.58 billion for next financial year 2018-19 and Rs28.7 billion revenue for previous year’s adjustments.

The gas utility has been allowed to recover this revenue shortfall from the gas consumers by increasing the average prices of gas by 47 percent. The total demanded increase in price was Rs722.51 per MMBTU while the regulator allowed increase of Rs236.81 per MMBTU.

The regulator has also allowed SNGPL to build 8,000 kilometers distribution network with an initial cost of Rs5.3 billion. It also allowed it to recover Rs1.12 billion from the gas consumers for rehabilitation of system and UFG (Unaccounted-for gas) control.

The authority allowed Rs344 million for 450 industrial and 5,000 commercial gas connections. An amount of Rs3.2 billion has been allowed for 400,000 new domestic gas connections. The regulator allowed 6.30 percent UFG.

Out of total gas theft amounting to 49.06 billion cubic feet per day, Ogra has put the burden of 29.2 bcfd on the consumers. The total UFG has been assessed at 10.5 per cent.

The SSGCL had projected a total revenue shortfall of Rs254.7 billion for next financial year 2019-20 and Rs24.9 billion for previous years’ adjustment. The regulator allowed passing 270.7 billion that include 245.8 billion for next financial years’ adjustment and Rs24.9 billion for previous years’ adjustment.

The total Unaccounted for Gas (UFG) of the company has been calculated at 15.69 percent. The regulator allowed 6.30 percent from the gas consumers amounting to Rs19.2 billion. The SSGC has demanded an increase of Rs176.41 per MMBTU but the regulator allowed Rs159.68 per MMBTU.

While the price increase recommended by Ogra for SNGPL and SSGC is different but since government is following a policy of uniform gas sale prices across the country, therefore the prices recommended by Ogra for SNGPL will be applicable to the consumers of both the gas utilities companies.