SSGC seeks 45% hike in gas price
Sui Southern Gas Company Limited (SSGCL) has sought an increase of 44.8 percent in gas price to meet the revenue shortfall for the financial year 2022-23.
The oil and Gas Regulatory Authority held a public hearing in Karachi on Thursday to consider Sui Southern Gas Company Limited (SSGCL)’s petition for Determination of its Estimated Revenue Requirements / prescribed prices for FY 2022-23.
The Petitioner has projected the average Prescribed Price at Rs. 1,013.02/MMBtu for FY 2022-23 in the natural gas business.
The Petitioner has also projected RLNG cost of service at Rs. 16.47 per MMBTU with the effect of July 01, 2022, for RLNG business.
Sui Southern Gas Company Limited (the Petitioner) filed a petition before the Ogra on February 14, 2022, for the Determination of its Estimated Revenue Requirements / prescribed prices for FY 2022-23.
SSGC seeks average gas price
Subsequently, the petitioner filed an amended petition on March 09, 2022, segregating the Revenue Requirement petition in terms of activities i.e. Transmission, Distribution & Sales. The petitioner has projected the average prescribed price at Rs. 1,013.02 per MMBTU.
Stay orders costing heavily to keep gas infrastructure intact: SSGC
The gas utility had sold gas worth Rs 263.5 billion and its operating cost stood at Rs 25.1 billion.
Its return on assets was Rs 7.9 billion.
The company had requested to allow a subsidy of Rs 1.37 billion on LPG air mix projects.
It requested Rs 15 billion on account of UFG adjustment on an LNG volume-handled basis.
SSGC believed that it had faced a loss of Rs 15 billion on account of UFG due to transporting RLNG in the system.
The company said it was facing a total revenue shortfall of Rs 88 billion and sought over a 44 percent increase in gas prices effective from July 01, 2022, to meet revenue requirements.
The Revenue Requirement of the petitioner will enable it to meet the cost of gas, operating cost, and return on assets.
Under a formula. the government has linked the cost of gas to the international price of crude oil/fuel oil.
Besides, the petitioner (SSGC) has estimated the RLNG cost of service at Rs. 16.47 per MMBTU with effect from July 01, 2022. This will also lead to an increase in the gas price of SSGC.
SSGC licenses expired
Moreover, the SSGC is seeking a license to operate in its franchise areas of Sindh and Balochistan to maintain its exclusive rights.
However, the petitioner has projected Rs. 1,395 million for laying of 189 km distribution mains to connect various new towns and villages. The key issues are whether the company’s claim on account of Transmission & Distribution costs at Rs. 22,585 million for FY 2022-23 is prudent, considering the fact the indigenous gas supplies are declining.
The second question was whether the claim of the company of Rs. 2,761 million on account of Expected Credit Loss in the light of compliance with IFRS 9 is justified based on the fact that the company is operating under a monopolistic regime and is less exposed to financial risk.
The other question in the public hearing was whether the claim of the company for the addition of 132,000 new domestic gas connections on indigenous gas and 713 commercial/ industrial connections on RLNG is justified while ensuring continuity and security of gas supply to existing as well as prospective consumers.
The question raised in the public hearing was whether the Company’s proposed expansion of the distribution network of 1,123 KM amounting to Rs. 7,719 million is prudent, considering the fact that SSGCL no longer holds exclusivity to develop gas schemes in its franchised area of Sindh and Baluchistan provinces.
SSGC had also claimed capital expenditure amounting to Rs.37,618 million against indigenous and RLNG the expenses claimed against UFG control activities are justified in view of the 13.98% UFG projected by the Compan
