ISLAMABAD: The gas utilities – Sui Northern Gas Pipelines Limited (SNGPL) and the Sui Southern Gas Company (SSGC) - have projected UfGs at 8.24 percent and 13.86 percent, respectively for the financial year 2022-23, against the Oil and Gas Regulatory Authority’s benchmark of 6.5 percent at distribution system.
The regulator has taken the decision on the petitions of both gas companies regarding the determination of estimated revenue requirements (DERR) for the financial year 2022-23.
The authority observed that transmission network losses have mostly remained around 0.5 percent in the case of both the gas utilities for a network of SNGPL and SSGCL, however, losses in the distribution segment of SNGPL have always remained high.
Effective March 3, 2022, the OGRA Ordinance has been amended to redefine LNG/RLNG as natural gas and brought under the ambit of OGRA Ordinance, which was previously treated as “Petroleum” under Petroleum Products (Petroleum Levy) Ordinance 1961. Hence in line with the latest amendment in OGRA Ordinance, ring-fencing of RLNG does not remain valid as the distinction between RLNG and natural gas has been abolished.
The SNGPL has projected UFG at 8.24 per cent (29,536 mmcfd) for the next financial year. The petitioner has however restricted its UFG adjustment to Rs750 million. The regulatory authority has provisionally allows the SNGPL, UFG adjustment at Rs8,806 million (Rs727.40 mmcfd at national WACOG) for the year 2022-23.
At the distribution system, the UFG to the SNGPL is allowed 6.25 per cent and 0.36 per cent at the transmission network.
The SSGCL has estimated UFG for the said year at 13.98 per cent (49,000 mmcfd) for indigenous gas. The petitioner has projected a reduction of 3.27 per cent in its UFG for the said year as against the actual figure of 17.25 per cent for the financial year 2019-20.
The authority provisionally allows UFG adjustment of Rs19,510 million at indigenous national WACOG of Rs727.40 mmcfd) from the revenue requirement for said year.
The UFG in Balochistan franchised area of the SSGCL alone accounts for around 50 percent of the total UFG where tampering/damaging of meters is common practice in most areas.
Another issue is unauthorized consumption of gas in the domestic sector through makeshift connections etc. in illegally occupied lands like Katchi Abadis and buildings constructed on encroached lands in Karachi are on increase. The number of such illegal connections is currently estimated to be around 500,000 to 700,000 approximately. These illegal connections are on the rise due to the fact that the Sindh Building Control Authority has prohibited the provision of legal utility services to any premises unless its completion plan has been approved by the said authority. This phenomenon has immensely contributed to the increase in UFG.
The regulator notes that despite the achievements claimed by the SSGCL for UFG control activities, the overall UFG of the gas company during the financial year 2017-18 to 2019-20 remained dismally higher in the range of 17.10 to 17.25 per cent.
The regulator concludes that UFG for the SSGCL be also segregated in terms of transmission and distribution and therefore, allowable loss for the transmission network is provisionally calculated at 0.14 per cent based on the length of the network, and in the case of distribution segment, the allowable losses have been provisionally calculated at 6.25 per cent.
Copyright Business Recorder, 2022