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SSGCL, SNGPL want increase in tariff

08 January, 2014

ISLAMABAD: The Sui Southern Gas Company Ltd (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL) have sought a tariff increase on the ground that without it the two gas utilities will become insolvent.

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ISLAMABAD: The Sui Southern Gas Company Ltd (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL) have sought a tariff increase on the ground that without it the two gas utilities will become insolvent.

And with each of them getting more than Rs1.8 million monthly salary and enjoying other perks, the managing directors of the gas utilities have asked for an increase in human resource expenses of the companies.

This was part of two-day presentations by the two companies before the Oil and Gas Regulatory Authority (Ogra). On Tuesday, the SSGCL management pleaded for an increase of Rs59.26 per Million British Thermal Unit (MMBTU) in gas price, to yield Rs20.7bn additional revenue for the company, as final revenue requirement for the fiscal 2012-13.

This was in line with the SNGPL's petition for an increase of Rs68.64 per unit (MMBTU) or Rs35bn additional revenue for the same year.

Despite receiving exceptionally lucrative salaries, the managers of the two companies have failed to control system losses of their companies which have remained in double digits over the years despite 4.5 per cent benchmark fixed by the regulator.

"The emoluments of the heads of the two gas companies are the highest among the public sector enterprises. But only their salaries have increased over the years and not the performance of the gas companies," said a senior executive of Ogra who attended the meeting that was not open to public.

The representatives of the SSGCL, led by its director and counsel Advocate Mirza Mahmud Ahmad, pleaded that if Ogra did not allow an increase in tariff and parking of losses made in troubled areas into the account of other consumers, the company would become insolvent.

Ogra was informed that the Sindh High Court had stayed treatment of non-operating incomes and unaccounted for gas (UFG) benchmarks that should be maintained in line with 2009-10. "Accordingly, late payment surcharge, meter manufacturing profit, royalty from Jamshoro Joint Venture and sale of gas condensate have been treated as non-operating incomes and UFG has been worked out at the benchmark of seven per cent," the petitioner contended.

It said that liquefied petroleum gas was a distinct fuel from natural gas and hence its sales revenue should not be treated as operating income, which benefited the consumers. Instead it should be treated as non-operating income to benefit the shareholders.

The SSGCL demanded that since the Rs20.75bn increase in additional revenue through prescribed prices would be higher than consumer prices notified for 2012-13, resulting in negative or recoverable gas development surcharge, the increase in prescribed price should be adjusted in 2013-14.

Ogra reserved its judgment, an official said, adding that its member oil Sabar Hussain seemed critical of the petition but two other members appeared supportive of the request.

End.


 
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