ISLAMABAD - Following a decision of the Lahore High Court (LHC) pertaining incomplete quorum of Oil and Gas Regulatory Authority (OGRA), the regulator has reserved its decision over a plea of Sui Southern Gas Company Limited (SSGCL) under which the gas utility has sought Rs59.26/mmbtu heavy hike in gas tariff.

Usually, the regulatory authority determines three types of tariffs in each single year over the request of gas utilities and dispatches own determination to the petroleum ministry for final approval prior to the notification. Usually, the OGRA gives its decision on Determination of Estimated Revenue Requirement (DERR), which most often becomes effective from 1st July, while Review of Revenue Requirement (RER) is notified on 1st January and Final Revenue Requirement (FRR) is determined in October normally. Earlier, OGRA has reserved its decision with regard to determine Rs60/mmbtu gigantic hike in the gas tariff, which was sought by Sui Northern Gas Pipelines Limited (SNGPL) in a plea. This time the regulator has once again reserved judgment pertaining gas tariff determination of the SSGCL for final Revenue Requirement (FRR) of fiscal year 2012-13. But, as and when the regulatory authority will announce the required decisions, both gas companies -SSGCL & SNGPL - and their shareholders will face the impact of Ogra decisions.

Sources in petroleum and natural resources told TheNation that the SSGCL, in its plea submitted with OGRA, has sought Rs 59.26 /mmbtu (Million Metric British Thermal Units) colossal increase in gas tariff on account of various heads particularly the final revenue requirement (FRR) of fiscal year 2012-13 of both gas utilities.

 However, the regulatory authority has so far reserved its judgment over the gas tariff hike of the SSGCL, only because the quorum of regulator is incomplete. The OGRA will dispatch its final determination to the petroleum & natural resources ministry as and when its quorum will be completed, they added.

Official sources further told that SSGCL in the instant petition has claimed revenue requirement after incorporating actual sales and purchases based on consumer and wellhead gas prices and other relevant factors in terms of Section 8(2) of the Ordinance. The gas utility also claimed UFG at 7 per cent and LPS, MMP, Royalty from JJVL (Jamshoro Joint Venture Limited) and income from sale of gas condensate as non-operating incomes in line with the decision of SHC (Sindh High Court).  He also told that the petitioner has worked out its FRR for the said year at Rs 167,283 million for actual sale volume of 350,048 BBTU. Based on the provisional prescribed prices and actual sale mix, the gas company has computed a shortfall of Rs 20,282 million in its revenue requirement for the said year, and sought an increase of Rs 57.94 per MMBTU in the average prescribe price. The SSGCL has also requested for an additional amount of Rs. 462 million (Rs 1.32 per MMBTU) on account of its LPG Air-Mix project, resulting in a total shortfall of Rs 20,744 million in revenue requirement for the said year and also requested average increase in prescribed price of Rs 59.26 per MMBTU effective July 01, 2012.

A senior official at SSGCL further told that OGRA has completed its internal hearing process to determine the Final Revenue Requirement (FRR) of the gas company as a secret hearing to take a decision with regard to FRR of the SSGCL for FY 2012-13 was held here in Islamabad on September 20. Since the quorum of OGRA is not completed so the authority has reserved its decision regarding determination of gas tariff. He also told that the regulator has hold hearing on SSGCL petition secretly because hearing on FRR does not open for public. 

“Without the completion of quorum of the OGRA, the authority cannot take a decision concerning raise in gas tariff following a decision of Lahore High Court (LHC), an official said, adding, that at present as one member is needed to complete the authority because the completion of the Authority is mandatory, as LHC has given the verdict in this regard on August 5 and if Ogra comes up with any decision, then it would be tantamount to the contempt of court.

At present the chairman and vice chairman OGRA have to see all the affairs. Member Gas (OGRA) Mansoor Muzaffar, after completing his job tenure, has left the authority while Member Finance (OGRA) has become a dysfunctional one owing to an advice of the cabinet division.