Pakistan Government May Raise Gas Tariff


Government of Pakistan is considering an increase in the gas tariffs to compensate for the grave losses suffered by the Sui Northern Gas Pipelines (SNGPL) recent months, reports from Islamabad confirmed Saturday.

For the first time in company’s history, Sui Gas has registered substantial losses. It is estimated that in past six months the government owned and operated firm has gone Rs244 million in red.
Recently gas tariff to the consumer was increased by 18 percent but SNGPL finds market conditions unfavorable even after the price hike.

Shareholders have been informed that they will receive no dividends at the end of this fiscal year and they may suffer a loss of Rs0.44 per share of Rs10.

When asked for guidance, Chairman of SNGPL board of governors, Mian Misbahur Rehman said, “I have taken over only three days ago and at the moment I cannot comment on it.”

Another official on the condition of anonymity said: “it is virtual bankruptcy. The situation, by all means, is precarious for the company.”

Consumers are not the only victims: besides increasing gas tariffs, SNGPL employees are also being paid on time. For the last few months the company is not appropriately disbursing travel and medical allowances.

There are rumors that the provident fund of the employees may also be invested in the company’s assets.

During the period of last six months gap between the company’s receivables and its payables have grown rapidly.

SNGPL has receivables of Rs15.06 billion from the federal government and Wapda and payables are about Rs40.44 billion to the Oil and Gas Development Corporation, Pakistan Petroleum and Government Holdings.

Unlike HABCO and KAPCO where inter-corporate debt adjustment was a way out of the crisis, for SNGPL that cannot be a solution because its net payables are Rs25.38 billion making a negative of Rs9.51 billion between the company’s assets and liabilities.

SNGPL’s long-term liabilities went up from Rs53.8 billion to Rs55.67 billion and its liabilities increased from Rs52.56 billion to Rs57.58 billion.

The situation will be further compounded if the Oil and Gas Regulatory Authority decides to impose a fine for failing to meet the line losses standards.


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