The Oil and Gas Regulatory Authority (Ogra) has finally approved the tariffs increase requests of SSGC and SNGP to rationalise tariffs of indigenous gas and RLNG.
Surprisingly,the lower slabs who consume less and are almost poor consumers are most affected as their gas prices have been tripled, while for the higher slabs, the prices have been literally reduced.
The OGRA believs there is a massive difference in the actual cost of gas and the consumer sale prices of the gas companies, which is leading to massive cross-subsidies.
Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) — to hike their prices by 74.42pc and 75.35pc, respectively.
In its decision on the two companies’ petitions, Ogra allowed SNGPL to raise its average prescribed gas prices for the current fiscal year by Rs406.28/mmBtu and SSGCL to increase its average prescribed gas rates by Rs499.28/mmBtu.
The two companies had asked the regulator for a hike of Rs1,294.02/mmBtu and Rs667.44/mmBtu, respectively, effective from July 2022.
Previously, the average prescribed gas price for SNGPL consumers was Rs545.89/mmBtu, which would now be Rs952.17/mmBtu. Similarly, the average prescribed gas price for SSGCL consumers was raised from Rs662.63/mmBtu to Rs1,161.91/mmBtu.
The SSGC called for an increase of Rs667.44/MMBTU, effective from July 2022. Its current average prescribed price is Rs692.63. However, Ogra allowed the average prescribed gas prices price to reach Rs1,161.91MMBTU, an increase of Rs469.28/MMBTU.
For domestic consumers, the prescribed prices for the lowest slab, which was earlier Rs121/MMBtu, has now been increased to 952.17/MMBtu depicting an increase of 687 percent.
For the next slab, it has been increased from Rs300/MMBtu to Rs952.17/MMBtu. Interestingly, for the highest two slabs, the prices have been reduced after fixing the rate at Rs952.17.
Earlier, the second slab was paying Rs1,107/MMBtu and the last one was paying Rs1,460/MMBtu. Now comparing these prices with the new prices, there is a sizeable reduction in gas price for the rich consumers.
Similarly, for commercial consumers (tandoor), the five slabs have been abolished, and the rate fixed at Rs952.17/MMBtu. Earlier, the tandoors gas tariff was Rs110/MMBtu for the lowest slab and Rs700 for the highest slab.
This rise in gas prices will increase the cost of production for industries that are likely to pass on the impact to the end consumer.
The regulator’s decision will be applied after the approval of the federal government. If the decision is not approved within 40 days, it will be implemented automatically.