Lahore: Swui Northern Gas Company has issued clarification on the increase in gas prices. According to a spokesperson, 94% of the gas price is based on the cost of gas while the remaining capex is based on return on investment. The total gas price includes only 4% of operating costs, including individual performance.
The company’s position is that all gas purchase contracts are denominated in US dollars and are linked to the price of crude oil/Brent oil. Every 6 months, there is also an increase in the local gas wellhead price. Due to the shortage of local gas in the winter season, domestic consumers have become dependent on RLNG supply.
Swui Northern stated that the average price of RLNG is approximately 3,500 rupees while the average selling price of the domestic sector is approximately 1,100 rupees. Domestic consumers are facing a shortage of Rs 231 billion due to the RLNG supply, which is a major reason for the increase in gas prices.
It was further explained that by recovering RLNG costs, the gas supply chain can be maintained in the country. There has also been a record increase of Rs 69 billion in the price of local gas. The average gas price for domestic consumers in the protected category is still Rs 513, which is lower than the buying price of Rs 1,674 per MMBTU.
44 lakh or 60% of Swui Northern’s gas consumers fall under the protected category. The gas bills for protected consumers in the month of February are Rs 2,000 including taxes. It is expected that Swui Northern will provide a subsidy of Rs 128 billion to its consumers in the financial year 2023-24. Ogra has been holding public hearings since 2002 to determine the revenue requirements of gas companies. The upcoming Ogra public hearing is for the financial year 2024-25, which will be effective from July 1, 2024. This hearing will not have an immediate impact on gas prices.