ISLAMABAD, Aug 6: The Oil and Gas Regulatory Authority (Ogra) on Tuesday reduced the prescribed price of Sui Southern Gas Company Limited (SSGCL) by about 0.3 per cent or 32 paisa per thousand cubic feet (MCF) with retrospect from July 1, 2001.

“After detailed scrutiny of accounts, the authority has found SSGCL’s revenue requirement in surplus of Rs76 million as against Rs1.178 billion shortfall claimed by the company and has accordingly reduced the prescribed price by 32 paisa per MCF,” said chairman Ogra, Munir Ahmad, here at a news conference.

On the basis of this determination, the federal government would advise Ogra about the extent of increase in the consumer price for each category within 40 days, and the Ogra would be required to notify the new consumer rates accordingly, Munir explained. He said that the determination was only for the year 2001-02 and the company would have to file another petition to fix prescribed price for the current year i.e. 2002-03.

He said that under the ordinance, Ogra did not have the powers to advise the government on the consumer prices, and could only determine the prescribed prices. Besides, the prescribed price, gas development surcharge (GDS), and other taxes form part of the consumer price.

He said that Ogra determination about the gas sale price was not binding on the government which had the right to set the GDS rates, but by implication, the government could pass on the benefit of reduction in prescribed price to the consumers. With this determination, the government would get an additional Rs76 million in the GDS, he explained.

To a question, he expressed his ignorance about a decision of the federal cabinet announced in February 2002 to increase gas tariff by about 130 per cent in three years as a result of the dismantling of gas price agreement (GPA) with Pakistan Petroleum Limited (PPL).

The SSGCL had demanded a total of Rs7.35 per MCF increase in its prescribed price including Rs5.11 per MCF to ensure 17 per cent return on average net fixed assets and Rs2.24 per MCF against profit on the sale of its LPG business.

The Ogra also disallowed a Rs90 million operating expenditure as a result of a yet to be signed agreement with combined bargaining agent union of the company staff for increase in the salaries.

It directed the SSGCL to conclude the agreement with the CBA on the basis of certain specified principles like an increase in productivity, domestic inflation rate, control over overtime expenditure, medical facility, and rightsizing of the manpower.

The authority also added back Rs893 million into the operating revenue on account of late payment surcharge which was claimed by the company as non-operating income.

Ogra also directed the SSGCL to reduce the unaccounted for gas (gas losses) progressively from the current 7.65 per cent to 6 per cent within the next three years. The SSGCL’s request for crediting to it Rs515 million, received on account of the LPG business, was turned down.

On the question whether the 17 per cent guaranteed rate of return to SSGCL would be continued, and for how long, the chairman Ogra stated it may take a year or two to determine a reasonable rate of return for want of a comprehensive study. Until such time, the government has directed Ogra to continue the existing agreement with ADB for guaranteed 17 per cent return on net assets to the company.