The consumers will be facing another blow in the face of gas tariff increase as Sui Southern Gas Company Limited (SSGCL) has sought an upward revision in gas price by Rs 60.75 per MMBTU from July 1, 2010 on back of currency devaluation and rise in global oil prices.
According to the mechanism, gas utilities seek revision in gas prices twice a year. Government had passed on 18 percent hike in gas tariff across the board to all types of consumers from January 1, 2010 in line with increase in global oil prices.
Sources revealed to the Business Recorder that SSGCL had submitted a petition regarding the proposed raise in gas tariff from July 1 to Oil and Gas Regulatory Authority (Ogra). After reviewing the petition, Ogra will conduct public hearing to have the views of other stakeholders which included textile and CNG industry.
According to sources, SSGCL had informed Ogra that it was facing a revenue shortfall of Rs 22.3 billion during the current financial year 2009-10 and therefore, it required raise in gas tariff to adjust the revenue shortfall.
SSGCL had sought the increase in gas tariff by Rs 60.75 per MMBTU in line with rise in global oil prices and depreciation of rupee against dollar. Import parity pricing formula is followed while determining the gas prices in the country despite gas is also produced locally.
After the proposed increase in gas tariff, its new rate will be Rs 317.97 per MMBTU from July 1, 2010.
Earlier, SSGCL had demanded an increase in the prescribed price by Rs 57.22 per MMBTU with effect from January 1, 2010 projecting a shortfall in revenue up to Rs11.606 billion in its petition.
The stakeholders like CNG owners association and textile industry are expected to strongly oppose the proposed raise in gas tariff as Ogra had already allowed 18 percent increase in prescribed prices and any further increase shall have adverse economic and financial impact on gas consumers.
"An increase in gas tariff would indeed be a loss to the industry resulting in high cost of production that may cause a fall in exports depriving the country of much needed foreign exchange, one industrialist said.
