ISLAMABAD: Sindh industries and Pak LNG Limited (PLL) rejected the petition of Sui Southern Gas Company (SSGC) for revenue requirements for the fiscal year 2024-25 in the Oil and Gas Regulatory Authority’s public hearing held on Monday.
The stakeholders asked the regulatory authority to end artificial subsidy for the domestic sector and provide gas to Sindh as per Article 158 of the Constitution.
Earlier, Mohammad (Razi) Raziuddin, representative of APTMA (Sindh) while rejecting 150 per cent raise for export-oriented (captive) and 95 percent for export-oriented (general industries) with effect from February 1, 2024, said a further increase will close down the industrial units in the province.
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In the recommendations, he said the wellhead prices need to be rationalised. The discrimination in gas tariff via the cross-subsidy is against the constitution and OGRA Act, the prescribed rate to be used for all. Export-oriented (textile) industries, including its associated power generation plants may be segregated from general industries to increase exports, FEX earnings and reserves. Export-oriented (textile) industries including its associated power generation plants to be fixed at Rs780 per mmbtu to increase exports, FEX earnings and reserves.
He further said expense on account of gas distribution expansion Rs46 billion may be disallowed under the present circumstances of declining gas production. All transmission line expansion expenses may be disallowed. Rs84 billion for effective and economically efficient system may be disallowed unless SSGC presents a prudent and proven case. With almost Rs40 billion already spent in recent years without
The APTMA Sindh further asked the SSGC to remove certain expenses from their petition. The representative said that Rs9.9 billion depreciation, Rs20.9 billion adjustment to revenue shortfall in Balochistan, Rs12.5 billion financial charges on short-term borrowing, Rs46 billion gas distribution, Rs84 billion efficiency improvements, and Rs29.2 billion UfG improvement.
M Yousaf Inam - Head of Sales and Business Development, PLL said artificial subsidy to end consumers resulted in super load to financial health and circular debt of the gas sector.
He said the ratio of depletion of gas reserved in last four years has resulted on more reliance on imported fuel. He said the OGRA should implement the Average Cost of Gas (WACOG).
Managing Director Imran Maniar strongly reacted to the observations made by interveners.
He claimed in a short period of time volume of UfG in overall Sindh has been reduced to seven per cent from 15 percent.
He apprised the industry that cheap gas at the previous rate of Rs780 per mmbtu has not been available to end consumers. He suggested the industry to produce better products to increase their revenue and exports rather to focus on conventional productions like towels.
He further alleged that oil and gas exploration companies wind up their business in the country due to non-payment of their dues. The reason is, he said Rs36 billion of the company has been struck in litigation since 2015. He further said that the company was not making extra money.
Tariq Mansoor advocate alleged that the government did not issue gazetted notifications of the last three gas increases which they had challenged in various courts of law.
The SSGC is seeking a Rs274.40 per mmbtu increase in gas prices effective from July 1st this year to meet the revenue requirement of Rs359 billion.
The company is seeking a sum of Rs25 billion on account of return on assets.
Copyright Business Recorder, 2024
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