Yesterday’s massive gas price surge, following multiple pump and power price hikes in quick succession, adds to consumers’ burden
By Staff Reporter
ISLAMABAD: The markets may have responded rather well to the government’s recent moves to put a stalled International Monetary Fund (IMF) bailout back on track, but households are staggering under the enormous burden of inflation brought on by successive hikes in energy prices.
Oil & Gas Regulatory Authority (OGRA) on Friday passed an up to 45 percent increase in natural gas prices to shore up the two liquidity-challenged gas utilities, reeling under monster circular debt and gas subsidies.
The move comes on the quick heels of a massive increase in pump prices and power tariffs.
Piped natural gas fuels the kitchens of large numbers of Pakistani urban households.
Based on Determination of Estimated Revenue Requirement for fiscal year 2022-23, OGRA determined 45 percent and 44 percent jump in tariff for Sui Northern Gas Pipelines Ltd (SNGPL) & Sui Southern Gas Company (SSGC) respectively.
As per the determination, OGRA has allowed SNGPL to increase gas price by 45 percent or PKR 266.58/MMBtu.
SNGPL had requested the gas sector regulator to approve an increase in gas price by PKR 1,079/MMBtu against the revenue requirement of PKR 597 billion for the upcoming fiscal.
Simultaneously, SSGC received permission to raise gas price by PKR 44 percent or PKR 308.53/MMBtu. SSGC proposed to increase gas price by PKR 313/MMBtu, while projecting revenue requirement for FY23 at around PKR 286 billion.
Both determinations have been sent to the federal government for receipt of category-wise natural gas sale price advice.
The financial impact of previous years’ shortfall of PKR 264,894 million (Rs720.20/MMBtu ) has been referred to the federal government for an appropriate policy decision and is, therefore, not made part of instant determination.
The Petroleum Division earlier this week had said the gas companies were on the verge of bankruptcy.
On Monday, Minister of State for Petroleum Musadik Malik and Secretary Ali Reza Bhutta told the Senate Standing Committee on Petroleum the government was out of funds to bail out gas companies.
The minister further said tariff hike was unavoidable under the revised OGRA Act passed by the previous government under the IMF programme.
OGRA Chairman Masroor Khan said a cap on gas prices, maintained for many years, had brought the two gas companies under huge financial strain.
Bhutta said after the amended OGRA law the regulator would automatically stand notified on the completion of 40 days and the government did not have the power to veto this decision.
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