LAHORE: The Sui Northern Gas Pipelines Ltd (SNGPL) administration says despite the recent price increases, a subsidy amounting to Rs128bn is projected to be provided during the ongoing fiscal year for 2023-24 to all those domestic consumers falling under protected category/class.

“As many as 4.4m consumers of the SNGPL network fall in the protected category which is 60pc of the total consumers and whose bills during the winter month of February remained less than Rs2,000 (inclusive of taxes),” said a spokesman for the company in a press release on Thursday.

He said despite recent increases in gas prices, the average rate of gas for the protected class of domestic consumers is Rs513 per MMBTu, which is considerably less than the cost/price of Rs1,674/MMBTu.

The spokesman said the operating cost, including the HR cost, is only 4pc of the total gas price. 94pc is cost of gas alone, while the rest is return on capital expenses (CAPEX). He said the company considered consumers as protected ones who use gas in winter (November to February) up to 1.9 hm3 a month.

“Our indigenous gas resources are continuously depleting which has necessitated the diversion of RLNG to domestic sector consumers, particularly during the winter period.

The average cost of RLNG is about Rs3,500/MMBTu while domestic sector average sale price is around Rs1,100 / MMBTu. This differential amounting to Rs231bn has also necessitated the current price increase since the cost of diverted RLNG has to be recovered to keep the LNG supply chain functional,” the spokesman explained.

According to him, the cost of indigenous gas has also increased by Rs69bn whereas rupee has devalued by 55pc during the last two years alone while all gas purchase contracts are US $ denominated and linked with crude oil/furnace oil prices.

He said the gas business in Pakistan is highly regulated and is governed under the Ogra Ordinance 2002. Ogra, in order to determine revenue requirements of gas companies, has been holding public hearings since 2002. Ogra hold public hearings twice a year for determining the gas prices.

“The public hearings being conducted these days by Ogra are for FY 2024-25 which will become effective from July 1, 2024 and was not going to lead to any changes in gas price at this time,” he maintained.

Published in Dawn, March 29th, 2024