ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has allowed Sui Northern Gas Pipelines Limited (SNGPL) to charge eight times higher connection fee – Rs25,000 instead of existing Rs3,000 – for provision of new connections to domestic consumers in Punjab, Khyber Pakhtunkhwa and Islamabad.

The decision has been taken on a petition filed by SNGPL saying that demand for new gas connections had increased manifold in recent years despite increasing gas shortfalls in the country.

The company claimed that domestic gas connections resulted in higher system losses and, therefore, the facility should be given only to those consumers who were ready to pay higher connection charges which will increase cash flows to the gas company.

The shortfall in the national transmission system has already gone beyond 2 billion cubic feet per day (BCFD) or about 50 per cent of the total demand. The SNGPL wanted to be allowed to charge Rs25,000 per connection to first 44,000 consumers on the first come first served basis per year but Ogra allowed 25,000 consumers to be given the urgent fee facility each year. The company will be required to provide fresh gas connections within three months on payment of an urgent fee on the first come first served basis.

An Ogra official said that with the urgent fee the SNGPL was expected to generate additional revenue of about Rs625 million each year. Responding to a question, he said the Sui Southern Gas Company (SSGCL) that served consumers in Balochistan and Sindh had not yet sought a similar arrangement and hence the urgent fee facility would not apply to the two provinces.

He, however, conceded that a precedent had been set with the SNGPL and Ogra would have to allow the same facility to SSGCL whenever it made a formal request. He added that the issue of backlog of new gas connections was less serious in Sindh and Balochistan.

He said the regulator had also enhanced the limit for annual gas connections from 250,000 to 275,000.

The SNGPL had reported pending applications of about 440,000 from domestic consumers for more than 18 months for which it was facing pressure from politicians. As a way out, the SNGPL proposed to increase connection charges from Rs3000 to Rs25,000 for urgent cases.