Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) have requested a 220% increase in gas prices for the coming fiscal year. The two gas utilities have asked for the increase to take effect on July 1, 2021, in an attempt to reach the estimated revenue requirement (ERR) for the fiscal year 2021-22.
(MMBtu)SNGPL has demanded the Oil and Gas Regulatory Authority (OGRA) to raise its regulated price by Rs. 1,416 per million British thermal units (MMBtu) for the coming fiscal year. This includes the extraordinary recovery of about Rs. 670 per unit from the previous year.
OGRA stated that the company has requested an additional revenue requirement of Rs. 367 billion, which includes the Rs. 254 billion revenue shortfalls from last year. SNGPL has also requested an increase in the cost of service for re-gasified liquefied natural gas (RLNG) of Rs. 137.5 per unit. SNGPL’s current prescribed price is approximately Rs. 645 per MMBtu. Similarly, SSGCL, based in Karachi, has requested Rs.153 per unit increase in its prescribed price for the coming fiscal year. If OGRA permits the increase, the price will rise from around Rs. 779 per unit to around Rs. 932 per unit.
According to OGRA’s statement, SSGCL estimated a revenue shortfall of around Rs. 35 billion for next year in order to meet its revenue requirement of Rs. 252 billion, which includes electricity, operating costs, and return on assets. The prescribed price will rise by Rs. 110 per unit as a result. The cost of service for RLNG has been estimated by SSGCL to be Rs. 16.7 billion, or 43.38% per unit. OGRA has obtained input from stakeholders on demand. For the time being, it is unclear whether the price increase will be permitted.