ISLAMABAD: Gas tariffs will have to be raised by Rs 98 per mmbtu for SNGPL consumers and Rs 109.91 per mmbtu for SSGC consumers to meet the International Monetary Fund ninth review prior condition of zero increase in gas sector circular debt for the remaining four months of the current fiscal year.
Informed sources told this correspondent that to arrest any further addition to the circular debt, Oil and Gas Regulatory Authority (Ogra) must raise tariffs immediately that would stop the projected addition of Rs 70 billion into the existing Rs 670 billion circular debt of the two gas companies.
In a press conference on Friday, Finance Minister Ishaq Dar said that thegovernment has pledged to stop any further rise in circular debt adding that around Rs 170 to Rs 270 billion is added to the gas circular debt annually though the actual figures are available with Petroleum Division.
However, if 11.5 percent price hike for SNGPL and 11 percent tariff for SSGC is not implemented then the circular debt will rise to Rs 740 billion by end-June 2023, according to an official of petroleum division on the condition of anonymity.
Former Member Gas, Ogra, Mohmmad Arif told Business Recorder that gas companies usually inflate their loss figures prior to finalising their audited annual accounts.
At present, the gas tariff for residential consumers is Rs 450 per mmbtu in the Sui Southern Gas Company system against the prescribed price of Rs 850 per mmbtu and Rs 400 per mmbtu in the Sui Northern Gas Pipeline Limited system against the prescribed price of Rs 1,007 per mmbtu, showing a significant gap between the sale price and the actual cost of gas.
The government is considering introducing the WACOG tariff to recover the RLNG cost and the matter is pending with the Council of Common Interests (CCI).
At present, the RLNG price is ring-fenced and classified as a gas product. Earlier, RLNG was being treated as a petroleum product owing to which its cost could not be recovered from residential gas consumers. In the last four winters, RLNG valued at Rs 108 billion was injected into the system and an addition of Rs 110 billion RLNG is to be provided in the ongoing winter season or a total of Rs 218 billion will be diverted to the domestic sector in Punjab till February 2023.
In its recommendations on January 9, 2023, Ogra maintained that all classes of consumers should at least pay the average cost of service or the average prescribed price except wherever federal government policy guidelines have been provided, which shall be implemented accordingly.
Copyright Business Recorder, 2023