ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has reduced natural-gas rates for fertiliser plants but increased them for all power plants — both in public and private sectors — with backdated recovery.

In a notification issued on Friday, Ogra said that a cut of Rs76.59 per million British thermal units (mmBtu) in gas rates for fertiliser plants and Rs13 per mmBtu increase for power plants would come into force retrospectively on April 1, 2016.

The step, taken by Ogra on government’s instructions, was aimed at protecting the revenue stream of gas companies by shifting burden of farmers to common consumers, an official explained.

Fertiliser companies now have to reduce prices by Rs70 per bag under an agreement with the government. On the flip side, the move would lead to increase in power tariff.

The notification set the new gas tariff for the power sector at Rs613 per mmBtu. The feedstock rates for the fertiliser sector have been fixed at Rs123.41 per unit.

Ogra officials said new tariff for domestic and commercial consumers would be increased with effect from July 1, 2016 under a commitment with the International Monetary Fund (IMF) to revive biannual price adjustment mechanism from the same month.

On Sui Northern Gas Pipelines Limited (SNGPL) network (in Punjab and Khyber Pakhtunkhwa), the new price of gas applies to Dawood, Pak-Arab, Pak-China and Hazara Phosphate fertiliser plants.

On Sui Southern Gas Company Limited (SSGCL) system, the price has been announced for Fauji Fertiliser Bin Qasim Limited and Engro Fertiliser Company on system of Mari Petroleum Company Limited.

However, gas prices for the fertiliser sector being used as fuel to generate electricity will remain unchanged at Rs600 per mmBtu.

A senior government official said that gas prices for the fertiliser sector had been reduced to provide relief to farmers as it would help reduce their input costs.

The official said gas tariff for the power sector was increased because “it was already low”. The increase would result in a slight hike in generation cost for gas-based power plants across the country and would be recovered from consumers on account of monthly fuel adjustment.

Officials said the decision to reduce gas rates of fertiliser feedstock (basic raw material for fertiliser) was taken earlier this week at a meeting presided over by Finance Minister Ishaq Dar.

The meeting, also attended by a delegation of the fertiliser industry led by managing director of Fauji Fertiliser Limited, took stock of fertiliser offtake and prices in the country.

The government was committed to developing the agricultural sector and protecting farmers’ interest, Mr Dar said during the meeting, and referred to the “historic” Kissan Package of Rs342 billion announced by the prime minister.

The minister assured that the government would reduce the cost of agriculture inputs, particularly fertilisers, to increase yield and productivity.

The fertiliser industry and the finance minister agreed that there was a need to take urgent measures to achieve reduction in urea prices as international rates of the commodity had declined significantly. The price of locally manufactured urea was also needed to be reduced for the benefit of farmers.

Meanwhile, the National Electric Power Regulatory Authority (Nepra) announced the power tariff for 747-megawatt Guddu Power Plant.

The regulator approved Rs6.16 per unit tariff for power generation through gas sources and Rs9.55 per unit through high-speed diesel. It also approved total cost of the project at Rs74.5bn instead of previous estimates of Rs79bn.

Published in Dawn, April 30th, 2016