SNGPL reaffirmed its dedication to transparency and compliance with regulatory processes.
ISLAMABAD: Sui Northern Gas Pipelines Limited (SNGPL) has addressed concerns raised in the media regarding the rise in gas prices, emphasizing key factors contributing to the increase.
In a statement, SNGPL clarified that only 4% of the total gas price includes operating costs, including human resource expenses, while 94% represents the cost of gas itself, with the remainder being return on capital expenditure (CAPEX).
The company outlined three main reasons for the recent price hike:
- Depletion of indigenous gas resources, leading to the diversion of Regasified Liquefied Natural Gas (RLNG) to domestic sector consumers during winter months. The cost of RLNG is significantly higher than that of domestic gas, resulting in the need to recover the differential amount to sustain the LNG supply chain.
- Increased cost of indigenous gas resources.
- Depreciation of the Pakistani Rupee by 55% over the last two years, affecting gas purchase contracts denominated in US dollars and linked with crude oil/furnace oil prices.
Despite the recent price adjustments, SNGPL highlighted that the average gas rate for protected domestic consumers remains substantially lower than the cost price. A significant portion of SNGPL’s consumers fall into the protected category, with their bills during winter months remaining below Rs. 2,000 (inclusive of taxes).
Moreover, SNGPL projected a subsidy of Rs. 128 billion to be provided to domestic consumers during the fiscal year 2023-24, underscoring its commitment to affordability.
The gas business in Pakistan operates under strict regulation governed by the Oil and Gas Regulatory Authority (OGRA) Ordinance, 2002. OGRA conducts public hearings biannually to determine revenue requirements for gas companies.
Read more: SNGPL to provide uninterrupted gas supply during Sahr and Iftar in Ramazan
Importantly, the ongoing public hearings by OGRA are for the fiscal year 2024-25, effective from July 1, 2024, and will not result in immediate changes to gas prices.
SNGPL reaffirmed its dedication to transparency and compliance with regulatory processes to ensure fair and reasonable gas pricing for consumers.
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