The Oil and Gas Regulatory Authority (OGRA) has proposed a 6% reduction in natural gas prices to the government for consumers.
The suggestion came after a public hearing with the Sui Northern Gas Pipelines Company Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) and statistical analysis of their data.
The regulator issued its decisions regarding the state-run gas distribution companies which had approached it to sanction them up to 101% increase in prescribed gas prices with effect from July 1, 2020, to meet revenue requirements.
However, after holding public hearings, the authority rejected their demand and reduced the prescribed gas price of SNGPL by Rs40.94/mmbtu (or 6.1%) and SSGCL by Rs18.30/mmbtu (or 2%).
OGRA has sent its decision to the federal government for notifying the new prices.
The SNGPL had sought an average increase in prescribed prices of gas to Punjab, Khyber Pakhtunkhwa and Azad Jammu and Kashmir of Rs622.94/mmbtu to Rs1,287.19/mmbtu for financial years 2020/21.
The SSGCL, which is feeding gas to Sindh and Balochistan, has sought an increase of Rs85.35/mmbtu to Rs881.53/mmbtu from the current average prescribed price of Rs796.18/mmbtu.
The regulator has suggested slashing the prescribed price for SNGPL by Rs40.94/mmbtu to Rs623.31/mmbtu. For SSGCL, it suggested a cut of Rs18.30/mmbtu to Rs750.90/mmbtu.
OGRA, under Section 8(1) of the OGRA Ordinance, 2002, via its decision dated July 13, 2020, and July 14, 2020, has determined the revenue requirement of SNGPL and SSGCL for FY 2020-21 respectively and has sent the same to the federal government for gas sale price advice in respect of each category of consumers under Section 8(3) of said Ordinance.
OGRA has significantly slashed the gas companies’ demand for an increase in gas prices for FY 2020-21. The main reason for the reduction in price is international oil prices along with other disallowances made by the regulatory body in respect of revenue and capital expenditures.