SNGPL’s Rs 40 billion stuck in litigation
Aftab Ahmed
The Sui Northern Gas Company Limited (SNGPL) faces Rs 40 billion stuck due to litigation. SNGPL management informed during a public hearing Oil and Gas Regulatory Authority (Ogra) conducted here.
The company management sought implementation of an increase in meter rent from Rs 20 to Rs 40. Economic Coordination Committee (ECC) had already approved an increase in meter rent.
The top management also sought the regulator’s approval to link tariff with actual 100 percent throughput instead of the pipelines’ design capacity.
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The SNGPL management said that company had borrowed loans from commercial banks to build a pipeline. The company had to pay Rs 35 billion outstanding to banks so far.
Managing director (MD) SNGPL said that there is no such formula that tariff should be linked with design capacity. He requested the regulator to link the tariff with throughput.
The SNGPL also sought approval of 0.3 million additional gas connections. The regulator had already allowed 0.4 million per annum gas connections.
The company officials said during the public hearing that 2.7 million applications were pending. Therefore, it is said to allow additional connections to end the pendency.
SNPGL said that it was facing a revenue shortfall of Rs 35.5 billion on indigenous gas sales. It also required a Rs 21 billion accumulated shortfall. The company said that it was seeking revenue of Rs 29 billion on the cost of LNG supply.
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The company officials said that the major reason for the increase in gas prices was the exchange rate and crude oil prices.
The company further said that Ogra had disallowed some benchmarks in HR. It sought to review the allowance of HR benchmark. It said that they still had a shortage of 3500 employees.
Shahid Sattar representing APTMA raised questions about over 300,00 new connections. He said that there was no gas available for existing consumers. He added that expansion of the system is totally uneconomic and warned the company would further go down.
He further criticized the company seeking to link tariff with throughput rather than the pipeline’s designed capacity.
He said that throughput could vary, and the company’s responsibility is to arrange the supply of gas. He said that there is no justification for 100 percent capacity allocation.
He said that consumers were already paying a double tariff on RLNG expansion debt servicing, rate of return on assets.
Ghayas Paracha, Chairman CNG Association, said that SNGPL should follow the Ogra and government’s decisions to reduce gas prices.
He said that SNGPL moves a petition to increase gas tariffs after everyone said on different accounts. When there is a time of reducing gas tariff, SNGPL starts claiming revenue shortfall on account of outstanding, he said.
He said that it was unfair to put domestic consumers’ burden on those like CNG, which was already using expensive RLNG.
He said that other sectors, like fertilizer and export-oriented, were already receiving subsidized gas. Therefore, Paracha said that the CNG sector was badly hit due to an increase in gas prices.
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He also questioned the increase in the UFG rate. He urged the regulator to look into it. He said that the CNG sector could not bear more burden.
