ISLAMABAD: In a bid to reinstate the $6 billion IMF program, this time the government has no choice but to increase the system’s gas tariff by about 40-50%, as it s ‘expects the determination of revenue requirements for the 2022-23 fiscal year to be OGRA in mid-June, a senior Department of Energy official told The News. “The increase in the gas tariff will be applied from July 1, 2022.”
“So far, the two Sui gas companies, Sui Southern and Sui Northern, are facing mammoth losses of Rs 550 billion accumulated in previous years. Sui Northern faces a loss of Rs 350 billion and Sui Southern Rs 200 billion mainly due to failure to increase tariffs as required. From now on, the amended OGRA law in accordance with IMF guidelines will derive gas tariffs and their implementation. The IMF asked the government to guarantee from now on (next fiscal year 2022-23) no more losses for the two gas companies due to the stagnation of tariffs and to implement the modified Ogra law in the letter and the spirit.
Under the amended OGRA Act, he explained, whenever the oil and gas regulator determines the revenue requirements of the two companies and announces the gas tariff accordingly, it will automatically be put in place. implements after 40 days if the government does not respond to the set tariff. with any portion of subsidy for various categories of consumers.
The Sui Northern has already requested in its petition a 66% gas rate increase for the 2022-23 fiscal year and Sui Southern has requested a 46% gas rate increase. OGRA could make its decision on a tariff increase by mid-June 2022 after carefully considering the petitions of the two gas companies.
“However, we were roughly told that a tariff increase could be 40%, which can go up to 50% by adding a 10% increase. The 10% increase will be used to offload losses of 550 billion rupees accumulated in previous years,” the official said. “This 10% increase will continue to be part of future rates for years to come until gas utility losses are not reversed.”
Ogra previously revised the average tariff for Sui Southern down to Rs 670 per MMBTU but as the revised tariff was not implemented by the former government the gas utility continued to sell the gas at Rs 600 Rs by MMBTU. Similarly, the regulator has revised the average gas tariff to Rs829 per MMBTU, but its average selling tariff is still at Rs714 per MMBTU with no increase in the gas selling tariff by the government. The government implements the uniform tariff through subsidies and in the event that the estimated revenue requirements for the financial year 2022-23 and the gas tariff increase of 40-50% are announced by OGRA and even after 40 days the government does not respond in terms of subsidy, then it will be implemented automatically. Now the question arises as to how OGRA will implement the tariff increase as it gives the differential tariff for the two gas utilities. The official also said OGRA could offer advice to the government that part of the tariff increase could be used to reduce gas company losses. To a question, the official said that the government extends the subsidy to the fertilizer sector, special commercial consumers such as tandoor roti and some categories in the domestic sector.
Currently, the gas tariff for domestic categories is only Rs 121 per MMBTU for consumers who use 50 cubic meters of gas in a month and Rs 300 per MMBTU for those who use 100 cubic meters of gas per month. Consumers using 200 cubic meters of gas pay Rs 553 per MMBTU and those using 300 cubic meters pay Rs 738 per MMBTU and those using 400 cubic meters per month pay Rs 1,107 per unit and those using over 400 per month pay 1,460 rupees per MMBTU.