ISLAMABAD: Struggling to cope with increasing system losses and theft, two gas utilities — the SNGPL and SSGCL — have sought a 50 per cent increase in security deposit for all domestic consumers to generate Rs9 billion and partially offset revenue shortfalls.

The move, if approved, will affect around seven million consumers of the two utilities, as they will be charged Rs4,500 each as security deposit instead of the existing Rs3,000.

The additional impact of Rs1,500 per meter will be recovered from consumers through monthly bills at a time when gas bills are set to go up because of higher winter consumption, resultant expensive slab charges and consequent higher GST impact coupled with four to 13 per cent increase in tariff made effective from Sept 1.

Take a look: Gas tariff increased by up to 67pc

On top of that, the Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited have sought powers to revise deposit rates for domestic consumers on an annual basis depending on peak consumption during three winter months to ensure that in case of default the cost of gas consumed in these months could be adjusted against the security deposit.

If approved, the step will affect about seven million people

In July 2013, the two companies had fixed security deposit for new domestic consumers at Rs4,500, but they were not allowed by the Oil and Gas Regulatory Authority (Ogra) to implement it in case of old consumers.

Last year, the regulator allowed the SNGPL and SSGCL to increase the security deposit for larger domestic consumers (with monthly consumption of 2 HM3) based on their peak winter consumption, without holding any public hearing.

This year, however, the gas companies sought the increase for all domestic consumers, including lifeline consumers using less than 50 units per month, on the same pattern — without a public hearing.

But Ogra has obtained formal petitions from the utilities and decided to hold public hearing for the SNGPL in Lahore and for the SSGCL in Karachi later this month.

The gas companies have proposed that the increased amount of security deposit be recovered from smaller consumers in six to 12 instalments, along with monthly bills.

There are around 4.3 million domestic consumers in the SNGPL network and 2.5m in that of the SSGCL. About 75pc of the consumers will be affected by the move.

The two gas utilities claimed that the increase in security deposit was necessitated by a substantial hike in the cost of natural gas over the years as the already charged deposit was not enough to cater for the recovery of bills in case of defaults by consumers.

The SSGCL was of the opinion that the “request for minimum threshold of Rs4,500 and subsequent calculation on the basis of winter-month consumption for gas supply deposit (GSD) for domestic consumers was reasonable, in the absence of which replenishment and revision of GSD of domestic consumers would be a continuous exercise”.

It said the average monthly bill of its residential consumers was around Rs870 per month and the three-month deposit worked out to Rs2,610. It said that all domestic consumers could not be disconnected from the network due to resource constraints and consequently it took one to two months for disconnection. The effective outstanding amount against a consumer, therefore, went beyond the existing rate of Rs3,000.

On the other hand, the SNGPL said that a large number of consumers lived in rented premises where the consumption pattern varied from one to another. Likewise, government offices, armed forces premises and residential colonies would also face repeated security deposit revisions and related difficulties.

It said that gas was sold for at least 45 days and another 45 to 60 days were required for disconnection. The amount of security deposit based on three months’ bills on annual average is not sufficient to cover outstanding amount from consumers because most of the defaults occur during winter months when consumption is 3-5 times higher than annual average.

Published in Dawn, November 5th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play