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ISLAMABAD: The gas companies - SNGPL and SSGCL – will file a review of estimated revenue requirements with the Oil and Gas Regulatory Authority (OGRA) for another increase in gas prices to recoup shortfall of Rs47 billion at the closure of captive power units by January 2025.

According to OGRA, the Federal Government, under Section 8(3) of the OGRA Ordinance, 2002, has advised to maintain the existing natural gas sale prices for all categories of consumers except for general industry (Captive) that has been revised to Rs3,000 per MMBTU from Rs2,750 per MMBTU, effective July 01, 2024.

The federal government has the sole jurisdiction to fix sale prices for different categories of consumers of natural gas considering its socio-economic agenda and sectoral policies.

As per the Petroleum Division, at the closure of captive power units by January 2025, there would be a shortfall in revenue requirement for January 2025 which amounts to Rs47 billion.

This shortfall needs to be recouped through price revisions, wef, 01.01.2025 after receipt of OGRA’s RERRs of both the Sui companies in November-December 2024.

The OGRA has issued a determination of Estimated Revenue Requirements (ERR) for the fiscal year 2024-25for both SNGPL and SSGCL respectively on 20-05-2024.

The Commerce Division was (provided a list of captive power units for seeking details of export implications who has now confirmed that based on data from PRAL 349 units (with 523 gas connections) had exports US$ 13.31billion during fiscal year 2022.

The International Monetary Fund (IMF) mission has advised that besides phasing out of captive power plants their indigenous gas tariff would be increased to equate with the RLNG tariff.

Currently, captive power plants are being provided different blend proportions of the indigenous gas and RLNG on the network of SSGCL and SNGPL-proportion of 70:30 on SSGCL and 25:75 on SNGPL which in tariff terms translates into Rs3,000 per Mmbtu for units on SSGCL and Rs3,300 per Mmbtu per units on SNGPL, versus the notified RLNG tariff in rupee terms as Rs3,550MMbtu. However, in line with the commitment to the IMF, the gas tariff for the captive power plants is proposed to be revised.

On an annual basis, at the current tariff of Rs2,750 Mmbtu, the estimated surplus revenue from captive power units is Rs76 billion and at the proposed revised tariff Rs3,000MMbtu, the surplus would be Rs92 billion on annualised basis, however, pursuant to the commitment made with the IMF, at closure of captive power units by January 2025, there would be a shortfall in revenue requirement for January 2025 which amounts to Rs47 billion.

This shortfall needs to be recouped through price revisions, wef, 01.01.2025 after receipt of OGRA’s review of estimated revenue requirements (RERRs) of both the Sui companies in November-December 2024.

The Petroleum Division submits that except for general industry (captive power), there is no change proposed in the existing consumer gas prices, wef, 01.07.2024, the present indigenous gas tariff for industry (captive power) of Rs2,750 Mmbtu is proposed to be revised to Rs3,000 Mmbtu and Sui companies may continue to offer a blend of indigenous and RLNG to captive power units besides OGRA to consider revision of category-wise prescribed prices of both the companies to account for any anticipated surplus revenues enabling Sui companies to meet their prior year shortfalls/stock of gas circular debt.

According to the said determinations, the SNGPL requires revenue of Rs607 billion and SSGCL requires a revenue of Rs289 billion in the fiscal year 2024-25.

Copyright Business Recorder, 2024

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