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Gas prices go up, CNG stations go to court

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Gas prices have gone up in Sindh, prompting the CNG station owners to go to court.

The owners of CNG stations has challenged in court the government’s recent decision to increase the price of CNG. It filed its case in the Sindh High Court on Tuesday. The court issued notices to the ministry of petroleum, the chairman of the regulatory authority Ogra and the MD of Sui Southern Gas Company to explain.

The government has increased the rate for CNG by 40% from Rs700 (per one million British Thermal Units) to Rs980. The increase in gas prices will help the government increase its revenue and curtail losses in government-owned gas companies.

An alternate option would have been to provide subsidies to these companies, but the government is under pressure to reduce debt and does not have enough funds to subsidize such losses. The government’s current national debt stands at Rs30 trillion and it pays Rs6 billion daily in interest payments alone. Therefore, it decided to pass the gas sector’s loss onto consumers by raising prices.

The latest data shows that Sui Southern Gas Company and Sui Northern Gas Pipelines Limited report a combined loss of Rs156 billion a year. To overcome this problem, the Oil and Gas Regulatory Authority has proposed to raise SSGC’s price by 17% and that of SNGPL by 30%, thereby raising  the per kilogram CNG price by as much as Rs20.

The CNG association has said that these increases are illegal. Therefore, they have now gone to the Sindh High Court against Ogra’s notification.

 

 

 

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