SNGPL Seeks 137% Increase in Gas Prices

Sui Northern Gas Pipeline Limited (SNGPL) is urging a substantial rise in the prescribed cost of gas, proposing an increase of Rs506.35 per mmbtu (41%), from Rs1,246.49 to Rs1,762.83 per mmbtu for the anticipated revenue requirements in the fiscal year 2023-24.

The company is seeking a considerable 137% hike in the prescribed price to address previous years’ shortfalls, setting the new rate at Rs2,961.98 per mmbtu. Additionally, they propose Rs293.07 per mmbtu for RLNG supply starting from July 2023.

Presenting its estimated revenue requirement (RERR) for the fiscal year 2023-24, SNGPL is appealing to the interim government to adjust the prescribed and sale prices of gas to fully meet the company’s revenue needs.

This proposed increase is attributed to fluctuations in crude oil prices, exchange rates, revisions in sale prices, and the inclusion of RLNG diversion costs.

The projected shortfall in indigenous gas business for the fiscal year 2023-24 stands at Rs179.160 billion, with the inclusion of previous years’ shortfalls amounting to Rs606.990 billion. The estimated RLNG cost of supply is Rs72.160 billion.

SNGPL’s petition is undergoing revisions based on actual gas costs and sales data for July and August 2023. This has led to a reduction in the indigenous gas business shortfall from Rs181,515 million to Rs179,160 million.

This proposed price increase impacts approximately 7.6 million industrial, commercial, and domestic consumers served by SNGPL.

The calculations for the proposed increase are based on projections, assuming an exchange rate of Rs290 against the US dollar, an average C&F crude oil price of $95 per barrel, and a ufg of 7.66%.

The Oil and Gas Regulatory Authority (OGRA) is scheduled to conduct a hearing on December 11 to assess and discuss the suggested price adjustments in response to SNGPL’s application.

In a separate petition, the gas company is also seeking an increase in the gas security deposit for both new and existing system gas and RLNG consumers. The proposed minimum security deposit for new domestic consumers (system gas) is Rs4,500, and for existing consumers with higher registered winter consumption, the security deposit will be recovered based on 90 days’ consumption, calculated from the average consumption of the previous year’s winter season.