ISLAMABAD - Showing strong reservations over SNGPL’s demand for 36 per cent increase in gas prices for the poor consumers, the Khyber Pakhtunkhwa government has asked the Oil and Gas Regulatory Authority (OGRA) to shift the increase to the rich customers instead of poor.

Intervening on the behalf of the people of Khyber Pakhtunkhwa, the KP government has submitted its reservation to the authority, saying that the province has serious concerns over the demand of the SNGPL for the hike in gas prices as it will adversely affect the economic stability of the provinces and put unwarranted burden on the poor consumers of KP, a source in OGRA told The Nation here Thursday.

In a petition filed by Sui Northern Gas Pipeline before OGRA, under section 8(1) of the Oil and gas Regulatory Authority (OGRA) ordinance 2002, has asked for the price increase of 38.35 MM/BTU for the year 2015-16. The Sui Northern Gas Pipeline Limited (SNGPL) has suggested to OGRA the increase of 36 percent for the first slab, 18 percent for the second slab while 7 percent for the third slab. OGRA will hold a public hearing on the price increase petition of SNGPL, on September 10 in Lahore and September 14 in Peshawar.

The Pakhtunkhwa government in its letter to OGRA said that it is unjustified to increase the gas tariff for the poor by 36 percent for the middle class by 18 percent and for the rich by 7 percent. The small Tandoor consumers, making bread for the poorest people, will be affected most by the tariff increase, while the elite and luxury restaurants are being provided relief at the expense of the poor, the KP government stated in its letter to OGRA.

According the KP stance the increase, demanded by SNGPL, in average prescribed gas price of Rs 38.35 MM/BTU is unjustified. The province has offered OGRA, that the authority and KP government can jointly workout technical and commercial systems to reduce the prescribed price

The government of KP has requested OGRA to reverse the SNGPL demanded tariff in favor of poor consumers and increase the tariff by 36 percent for the rich while 7 percent for the poor, the letter maintained, adding that SNGPL may also justify their subjective and objective study in arriving highest increase for the poorest consumers of Pakistan.

The KP government has also questioned the Indicative Prices calculation by SNGPL saying that “It is known fact that international crude oil, furnace oil and gas prices have gone down substantially therefore for 2015-16 the indicative prices should be lower, thus reducing the cost of goods sold and total expenses of total Estimated Revenue Requirements,”. It does not make any sense that, worldwide, the prices of petroleum/ gas products are going down while, locally, the gas utility is demanding the hike in gas tariff.

The SNGPL has not provided affect on Gas Development Surcharge (GDS) of KP due to increase the prescribed price but it is indicated that the province shall be the hardest hit of GDS reduction, the KP government claimed.