UfG reduction plan: SSGCL yet to introduce fixed bill tariff for Balochistan

ISLAMABAD: Sui Southern Gas Company Limited (SSGCL) has yet to introduce a fixed bill gas tariff in Balochistan for fiscal year 2020/21, which will help in further reduction of 2.35 percentage points (or 10,000 mmcfd of gas) UfG.

The proposed fixed bill gas tariff for Balochistan is part of a UfG reduction plan of the government, which was shared with the International Monetary Fund (IMF) for its Extended Fund Facility (EFF).

The government has given approval to the state-run gas companies' UfG reduction plan to increase their revenues by Rs29.12 billion till financial year 2021/22.

Under this plan, the SSGC will add around Rs20.1 billion to their accounts in the shape of increasing revenues by cutting down the UfGs.

The Economic Coordination Committee (ECC) of the Cabinet in October 2019 formally gave the approval to this three-year (2019/20 to 2021/22) UFG reduction plan for two gas utilities.

The SSGCL under the plan will have to reduce its UFG by 9.55 percentage points (or 40,629 million cubic feet of gas per day [mmcfd]) that is in financial terms equals to Rs20.1 billion.

In last financial year 2019/20, the company had to reduce its UFG by 1.87 percentage points (7,965 mmcfd), in 2020/21, the UFG reduction plan is 2.46 percentage points (or 10,462 mmcfd), while in final fiscal 2021/22, the reduction target is of 2.87 percentage points (or 12,202 mmcfd).

Besides, under the approved plan, the SSGC will have to introduce fixed-billing gas tariff in Balochistan for fiscal year 2020/21, which will help in further reduction of 2.35 percentage points (or 10,000 mmcfd of gas) UFG.

The Oil and Gas Regulatory Authority (OGRA) would move a summary to fix gas rates for domestic consumers of Balochistan by the end of this month; a parliamentary panel was informed on Friday.

Since UFG disallowances has significant impact on the revenues and which in turn has compounding impact on the revenue shortfall of these companies, so the government decided for taking corrective measures in their UFG reduction, and started consultative process and held various meetings with these companies.

Currently, the UFG level of both the companies is around 13 percent because of commercial and technical losses, which is significantly above the allowed benchmark of 7.5pc.

To bring the losses down, these companies had prepared the UFG reduction plans for three years.

These plans include introduction of 30 key monitoring indicators (KMIs) that include theft control and compliance with industry standards that will facilitate the identification of gaps and the design of solutions.

Copyright Business Recorder, 2021