Another Huge Gas Tariff Hike on The Cards

In an effort to counter the escalating costs of gas and associated components, the Sui Southern Gas Company (SSGC) has once again requested a 15.38% increase, equivalent to Rs226.18 per MMBtu, in the average prescribed gas prices for the current fiscal year.

According to the petition filed with the Oil and Gas Regulatory Authority (Ogra), SSGC is advocating for a revision of the rate from the existing Rs1,470.21/MMBtu to Rs1,696.39/MMBtu, effective from July 1 of the ongoing financial year.

The company’s petition outlines an estimated revenue requirement of Rs47.773 billion for FY24. The average prescribed price is largely composed of the cost of gas, constituting over 85% of the determined price.

The Karachi-based gas utility emphasizes that the cost of gas is tied to the international price of crude oil/fuel oil, as per agreements between the federal government and gas producers. Additionally, SSGC has calculated the cost of RLNG’s service at Rs48.8/MMBtu for FY2023-24.

Significantly, the company’s petition includes Rs13.45/MMBtu for the LPG air-mix projects and Rs95.40/MMBtu to be recovered from consumers to counteract revenue shortfalls from Balochistan province.

Simultaneously, SSGC has filed another petition for the revision of the security deposit of domestic (system gas & RLNG) consumers. In this petition, the company proposes revising the gas supply deposit (GSD) based on the highest three months of consumption during the year. The recovery of the gas supply deposit shortfall from domestic consumers will occur over six months in equal installments.

The petition notes that currently, only 1.697 million out of 3.186 million domestic consumers, or 53%, are secured with their gas supply deposit. Meanwhile, 1.426 million domestic consumers are unsecured, with a GSD shortfall of Rs9.579 billion against the required GSD of Rs15.019 billion.

In response to these petitions, Ogra has invited comments from all interested and affected parties, including gas consumers and the general public. A public hearing on the petition is scheduled for December 18, 2023, in Karachi, during which the regulatory authority will determine the gas prices.