Hike comes into effect from July: Rs65bn financial impact also added to gas tariff raise: govt
ISLAMABAD: The interim government has raised the gas prices up to 193 percent with effect from July 2023 for consumers of both gas companies -Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), however, the effective date on notification is November 1, 2023.
In a joint press conference along with caretaker information minister, Minister of Energy, Power and Petroleum Muhammad Ali acknowledged that Rs65 billion of financial impact of last four months (July-October 2023) of current fiscal year 2023-24 has also been included in the gas tariff raise.
He contended the gas companies revenue loss would be Rs400 billion which would further add to Rs2.1 trillion oil and gas sector circular debt.
“In case the interim government does not increase the gas tariff, the estimated revenue for the current fiscal year shall be Rs513 billion i.e. deficit of Rs191 billion from ERR fiscal year 23-24 on natural gas and deficit of Rs210 billion on RLNG, cumulatively Rs400 billion,” the minister argued.
He further explained that the revised revenue requirement for the current fiscal year is Rs916 billion of both gas companies against approved Oil and Gas Regulatory Authority (OGRA) revenue requirement of Rs697 billion, Rs8 billion worth of additional gas of 14 mmcfd and RLNG diversion to domestic consumers of Rs210 billion.
Despite the increase in the gas tariff for almost all categories, subsides are still given to some sectors. Domestic consumers will receive Rs139 billion subsidy, fertiliser (feed) sector Rs45 billion and Roti Tandoor will receive Rs2 billion.
Responding to a question pertaining to mismanagement in moving gas raise summaries at various forums (federal cabinet/ECC), the minister rejecting allegations, said all the decisions of gas tariff raise had been taken with collective wisdom and in consultation with stakeholders.
He said 57 percent of the domestic gas connections fall in the protected category. The monthly bill of protected class will not exceed Rs1,300 including fixed Rs400 meter rent on a 0.9 hm3 in a month.
He maintained fertiliser prices are kept in line with Mari gas field’s cost of gas.
Mari gas is supplying 85 percent of fertiliser plants which is Rs580 per mmbtu and only Rs70 increase over the previous price just not to affect the farmers getting urea and ensure food security, he added.
Industry tariffs are set so as to rationalise the gas prices in the North and South regions and create a level playing field for everyone by offering gas to same price to existing and new industries.
The Petroleum Division in consultation with stakeholders has developed a regionally competitive energy tariff (RCET) considering the industry in India, Bangladesh, and Vietnam, which have developed themselves and emerged as net exporters.
He said more than 50 percent of the commercial category consumers already use LNG. More than 27 percent of the gas connections of the CNG category are RLNG-based.
The efficiency adjusted cost of CNG is almost half of that with petrol in equivalent terms. He said the decision will not affect 57 percent of the gas consumers. He said 36 percent middle-class consumers will pay the prices according to their gas consumption, while only seven percent rich class will be charged with high prices.
Copyright Business Recorder, 2023
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