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ISLAMABAD: Oil and Gas Regulatory Authority (OGRA) has approved the petitions of Sui Southern Gas Company Ltd (SSGCL) and Sui Northern Gas Company Ltd (SNGPL) and allowed them to increase gas prices.

The new prices will be applicable from January 1, 2009. OGRA has announced its decision on the petitions of SNGPL and SSGCL demanding increase in prescribed price of natural gas.

SNGPL demanded Rs. 97.62 per MMBTU effective December, 2008 or Rs. 112.70 per MMBTU if made effective from January, 2009 which comes to 40% of existing average price of Rs. 287.19 per MMBTU.

OGRA has slashed the demand by 82% and has revised the price upwards only by Rs. 20.56 per MMBTU only. Similarly, SSGCL had petitioned for increase of Rs. 97.73 per MMBTU from December, 2008 i.e. Rs. 114.01 per MMBTU from January, 2009.

The authority has reduced it to Rs. 18.55 per MMBTU effective January, 2009. SNGPL had claimed shortfall of Rs. 36 billion in its revenue requirement, which has been reduced to Rs. 7 billion by OGRA.

In case of SSGCL, the claimed shortfall was Rs. 22 billion, reduced by OGRA to Rs. 4 billion.

The price has been reduced so drastically because OGRA has taken an optimistic view of the situation by estimating average US $ exchange rate during January to June, 2009 at Rs. 75/- as against gas companies projections of Rs. 82/- to Rs. 83.17.

The authority has also fully taken into account the fall in international oil prices during the last two months.

Further, OGRA rejected the gas companies’ demand to compute well-head prices of purchases from Qadirpur gas field at Rs. 357/- per MMBTU and has taken it at Rs. 161.02 per MMBTU on the basis of its notification currently holding the field.

OGRA has advised the revised prescribed prices to the Federal Government for its consideration and decision about sale prices for various categories of consumers to be effective from January, 2009.

Earlier, OGRA held public hearings at Karachi and Islamabad on the gas companies’ petitions where representatives of various consumer groups had made detailed submissions, vehemently objecting to the gas companies’ high demand and pleading for their rejection all together.